USOIL rallied over 9% since I alerted my readers on long trade opportunities in this market last week. European Union considers joining the US in a Russian oil embargo which put more upward pressure on oil prices., Also, an attack on Saudi oil facilities over the weekend has added to the rally. This has supported the commodity currencies and especially my CADJPY trade idea. Pound traded higher after the rate hike last week and now it looks like there might be some trade opportunities in GBP pairs. Therefore in this report, I provide you with trade ideas on GBPUSD and, GBPNZD and update you on CADJPY and USOIL. Heads up for the Fed Chair Powell’s Speech. Follow the TIOmarkets Telegram channel via this Link. I will post updates and sometimes also new trade ideas in the channel. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.
I include Target 1 (T1) and Target 2 (T2) levels (or ranges) in my analysis so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level. While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets. If you need help more help with your trading join me at the next live analysis webinar here: www.TIOmarkets.com/webinarsI will show you live how to analyse the markets and identify trading opportunities.
GBPUSD is creating higher lows and could continue to do so as long as it stays above the 1.3110 support level. My trade idea is to look for long trades above the 1.3110 low with the T1 at 1.3134 and T2 at 1.3240. As usual price action has to confirm the trade idea. If it doesn’t, it’s better to stay in cash. Alternative scenario: GBPUSD breaks the 1.3110 support and trades down to 1.3040 – 1.3060 area.
GBPNZD is consolidating above a 1.9046 support. This opens up a possibility for an intraday rally and this is why I’m interested in long trades in this market today. Above the 1.9046 my T1 for GBPNZD is at 1.9185 and the T2 at 1.9360. Alternative scenario: GBPNZD breaks below the latest low at 1.9021 which increases the likelihood of the market moving down to 1.8972. Get our market analysis daily to your inbox! Register here for FREE!
CADJPY is still trending higher. I said on Friday that if the resistance at the latest high is successfully cleared then the market could rally to 95.00 – 95.50. The market is now trading well above that high and trending higher so the analysis is still valid. Fundamentals haven’t changed either. Alternative scenario: CADJPY doesn’t respect the supports and breaks the 94.53 support. This would probably take the market down to 94.10 or so again.
USOIL hit my targets and continued higher. Oil is trading right at the resistance level of 107.52 and the nearest key support level is at 104.49. A decisive break above the 107.52 could open a way to 111.82. Alternative scenario: Oil starts to sell off and breaks the bull channel low. This would probably take the market to 100 or so.
Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
|The Federal Reserve||The Fed is expected to continue rate hikes after a 0.25% hike in its March meeting. The current Dot Plot suggests as many as seven rate hikes this year and puts the median rate for 2022 at 1.9%. Dot Plot is the FOMC participants’ assessment of appropriate monetary policy.|
|Stimulus||The Fed is looking to scale down its bond-buying program (QE) but has signalled that it be careful with tightening due to the war in Europe.|
|Yields||The US 10-year treasury yield has risen to 2.187% as investors sell the bonds and adjust to the expected rate hikes.|
|Employment||The February non-farm payrolls increased by 678K while the analyst consensus had predicted 407K new jobs. Average hourly earnings came in unchanged (0.5% expected).|
|Inflation||The annual headline inflation reading for January came in at 7.5% (7% prior). This was the highest CPI print in 40 years. The core CPI (all items less food and energy) was confirmed at 6.0% (5.5% previous).|
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The Next Main Risk Events
- USD – Fed Chair Powell Speaks
- AUD – RBA Governor Lowe Speaks
- EUR – ECB President Lagarde Speaks
- CHF – SNB Chairman Jordan Speaks
- GBP – CPI y/y
- GBP – BOE Gov Bailey Speaks
- USD – Fed Chair Powell Speaks
For more information and details see the TIOmarkets economic calendar here.
Market News & Facts
- Waller: 50 bp hikes would be needed as per economic data
- US Existing Home Sales 6.022M (6.10M expected)
- BOJ keeps on stimulating the economy
- BOE hikes 0.25% as expected
- No 0.5% rate hike from the Fed (0.25% vs. 0.25% expected)
- German ZEW Economic Sentiment -39.3 (5.2 expected)
- US PPI m/m 0.8% (1.0% expected)
- US Empire State Manufacturing Index -11.8 (6.5 expected)
- Russia asks military assistance from China
- Russia: US corporate leaders could be arrested and imprisoned
- Canada February payrolls change 336K (160K expected)
- ECB upgrades inflation prediction to 5.1% from 3.2%
- China retail sales 6.7% (3.0% expected)
- EUR – Main Refinancing Rate unchanged
- US JOLTS Job Openings (11.26M, 10.96M expected)
Chief Market Analyst
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