EUR/JPY Price Analysis: Still scope for a move to 144.00

 

• EUR/JPY comes under some pressure and fades two daily gains in a row.
• There is still room for a potential rebound to the 144.00 region.

EUR/JPY seems to have met decent resistance around daily highs near 142.30 at the end of the week.

The continuation of the bounce off last week’s lows remains on the table in the very near term. That said, the cross could therefore extend the bullish attempt to the weekly top at 144.04 (September 20), which is deemed as the last defense for a move to the 2022 peak at 145.63 (September 12).

In the meantime, while above the key 200-day SMA at 135.84, the constructive outlook for the cross should remain unchanged.

EUR/USD: Upside could be limited even on good news regarding gas supplies – Rabobank

  EUR/USD has come within a whisker of parity. How low the pair goes is likely to depend on whether or not Russia wants to worsen the economic war with Europe, economists at Rabobank report.

USD strength may not relent until next year

“From a fundamental perspective, it is not difficult to paint a scenario in which EUR/USD could break below 1.00 and hold at lower levels into the winter months. That has been the case for a while.”

“If the Nord Stream 1 natural gas pipeline is switched back on, in time next week after its scheduled maintenance, the EUR is likely to be granted a reprieve. That said, even if the EUR is boosted, we expect USD strength to dominate into next year suggesting upside for EUR/USD could be limited even on good news regarding Nord Stream.”

“For now, we retain our one-month forecast of EUR/USD 1.03. Evidence that Russian gas supplies into Europe will be further disrupted into the winter would cause us to downgrade our forecasts for the EUR further.”

Euro sinks to multi-year lows versus dollar, Swiss franc and sterling

The euro fell to a seven-year low versus the Swiss franc and hit its lowest point in almost two years versus the dollar on Friday as the war in Ukraine lowered expectations of European economic growth.

The European single currency fell 2.1% this week, and was set for its worst week since April 2020.

It was down 0.5% to $1.1010 at 0850 GMT, near its weakest level since May 2020, following news Russian forces seized the largest nuclear power plant in Europe after a building at the complex was set ablaze during fighting with Ukrainian defenders, Ukrainian authorities said on Friday.

Authorities later said the fire in a building identified as a training centre had been extinguished. U.S. Energy Secretary Jennifer Granholm said there were no indication of elevated radiation levels at the plant.

Versus sterling, the euro also hit its weakest level of 82.61 pence since July 2016. It touched its lowest level since January 2015 of 1.0114 against the safe-haven Swiss Franc.

Analyst said the effects of surging energy and gas prices will likely undermine European consumption and economic growth prospects.

"The ECB is going to have no alternative but to look through this surge in inflation but the Fed is not going to delay so we will see more monetary divergence again," said Mike Kelly, head of global multi-asset at PineBridge Investments.

"The dollar should be getting a new spring in its step structurally if things do get worse," Kelly added.

The U.S. dollar index rose 0.36% to 98.073, after touching its highest level since June 2020 against a basket of peers.

While money markets do not expect interest rate hikes at the ECB's next meeting, the U.S. Federal Reserve is all but certain to raise interest rates at its March 15-16 meeting for the first time since the coronavirus pandemic.

Fed Chair Jerome Powell repeated his comments that he would back an initial quarter percentage point increase in the benchmark rate.

In Ukraine, Russian forces were pressing on with surrounding and attacking cities.

Elsewhere, the Australian dollar continued its advance, helped by the commodities boom, and rose 0.6% to a four-month high of $0.7370 versus the U.S. dollar.

High energy prices in turn have prevented the Japanese yen from benefiting as much from the safe haven flows, as Japan is a net importer of energy.

The yen briefly climbed on the dollar when news of the fire emerged, but later gave up those gains and was little changed at 115.37 per dollar.

Russian rouble falls to record lows after ratings downgrades

The Russian rouble slid further on Thursday, hitting record lows against the dollar and euro, after ratings agencies Fitch and Moody's (NYSE:MCO) downgraded Russia's sovereign debt to "junk" status citing the impact of Western sanctions.

At 0830 GMT, the rouble was more than 10% weaker against the dollar at 117.5 and had lost over 7% against the euro to trade at 124.1 on the Moscow Exchange, marking the first time the rouble has traded above 110 to the dollar in Moscow.

The Russian central bank imposed a 30% commission on foreign currency purchases by individuals on currency exchanges - a move brokers said appeared designed to curb demand for dollars - but that did little to halt the rouble's slide.

Russia's financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine, the biggest attack on a European state since World War Two.

Russia calls its actions in Ukraine a "special operation" that it says is not designed to occupy territory but to destroy its southern neighbour's military capabilities and capture what it regards as dangerous nationalists.

Since Russian troops entered Ukraine on Feb. 24 the rouble is down close to 30% against the dollar, and analysts said on Thursday it would probably remain highly volatile. The government has ordered Russian exporters to convert 80% of their forex revenues into roubles to support the local currency, but people are still queuing up at banks to buy dollars as the rouble slumps.

Trading on the Moscow Exchange's stock section remained largely closed on Thursday, a fourth day of restrictions ordered by the central bank.

Overnight, Fitch said that U.S. and European Union sanctions prohibiting any transactions with the Bank of Russia would have a "much larger impact on Russia's credit fundamentals than any previous sanctions". Moody's said the severity of the sanctions "have gone beyond Moody's initial expectations and will have material credit implications".

S&P lowered Russia's rating to sub-investment grade last week.

Russia's invasion of Ukraine and the sanctions imposed in response have led to dire warnings about the Russian economy, with the Institute of International Finance predicting a double-digit contraction in growth this year.

On Wednesday, index providers FTSE Russell and MSCI said they would remove Russian equities from all their indexes, after a top MSCI executive earlier this week called Russia's stock market "uninvestable".

📕Analysis on Gold on March 1, 2022:

- In yesterday's trading session, after the precious metal GAP rose to 1930, there were signs of decreasing and filling the GAP. Yesterday's closing session was around 1908. Although it ended the day with a bearish candle, it was a retreat candle and one more thing was that yesterday's Russia-Ukrainian negotiations were basically unsuccessful. As expected, there needs to be further negotiation so Gold still has many factors to boost the uptrend. - Moving to the H4 time frame, we can see that the price area around 1896-1900 is still the closest support area for precious metal Gold. Here we can establish a long position with a safe target around 1914 and expect 1920 in today's session.

Russia's rouble also recovered some ground, trading at around 82.8 per dollar

 The euro steadied on Friday following Thursday's sharp declines after Russia's all-out invasion of Ukraine unleashed the biggest attack on an European state since World War Too.

The dollar flattened against most currencies as markets walked back some of the tumultuous moves from the previous day.

Russia's rouble also recovered some ground, trading at around 82.8 per dollar, having hit a record low of 89.986 per dollar the day before.

"FX markets are slightly calmer this morning as the world tries to come to terms with war in Europe," said Chris Turner

Global Head of Markets at ING.

The size and prominence of the sanctions on Russian banks and the size of their FX deposits may take some time to percolate through, he said.

The United States, the European Union and some other countries responded to Russia's invasion of Ukraine with a wave of sanctions impeding Russia's ability to do business in major currencies along with sanctions against banks and state-owned enterprises.

Fighting continued on Friday though risk sentiment across markets improved after the shock in the previous 24 hours, with the pan European stocks index bouncing back around 1%. [MKTS/GLOB]

The euro was last at $1.1175, edging 0.15% lower against the dollar, having touched its lowest $1.1106 since May 2020 on Thursday.

Sterling also recovered some ground from Thursday's tumble to trade flat against the dollar at $1.3389, having hit a 2022 low of $1.3272 on Thursday.

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The safe-haven dollar index steadied against a basket of currency at 97.162 after climbing to its highest level since June 2020 the previous day.

As well as the direct fallout of the war in Ukraine, currency traders were trying to assess its impact on monetary policy around the world.

Policymakers at the European Central Bank (ECB) said the situation in Ukraine could cause the ECB to slow its exit from stimulus measures.

Meanwhile, investors and some U.S. officials said the war would likely slow but not stop approaching interest rate hikes.

Federal Reserve policymakers have been publicly sparring over whether to begin with a 25 or 50 basis point rate hike at its March meeting.

"We expect the consequences (of the conflict) to translate into a somewhat less hawkish stance from major central banks – tilting the Fed towards a 25 basis hike in March and keeping the ECB on the fence," said Invesco strategists in emailed comments.

rouble bonds over accusations of Moscow meddling in the U.S. election.

  - Western capitals have started putting in place fresh restrictions on Russia's sovereign debt as they seek to ratchet up pressure on Moscow over the conflict with Ukraine.

The United States and its allies introduced an initial round of sanctions after Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine on Monday. A string of harsher measures is expected after he launched a full-scale invasion on Thursday.

as the crises occurs the market you are looking for is not variable and some variations occurs for that to make your trading experience better FOREX ADVICE CLUB is havin all the knowledge to provide the best profits to you .

Access to Russian bonds had become increasingly restricted. U.S. sanctions imposed following the 2014 annexation of Crimea made future Russian dollar-denominated debt ineligible for many investors and key indexes.

In April 2021, U.S. President Joe Biden barred U.S. investors from buying new Russian rouble bonds over accusations of Moscow meddling in the U.S. election.

Here is an overview of what measures have already been added and what impact they might have:

WHAT ARE THE NEW RESTRICTIONS ON SOVEREIGN DEBT?

Washington announced a ban on U.S. entities participating in secondary markets for both rouble and non-rouble debt issued by Russia's central bank, the national wealth fund and the finance ministry after March 1.

The European Union agreed new sanctions that will target the ability of Moscow to access the bloc's capital and financial markets as well as services, and ban EU investors from trading in Russian state bonds. Canada's government said it would bar its citizens from engaging in purchases of Russia's sovereign debt.

Britain said on Wednesday it would stop Russia selling sovereign debt in London - one of the world's major financial centres for such transactions. The measures would require additional legislation, according to Western officials, and clearing transactions would also be affected. However, there was no indication on whether Britain would stop trade in outstanding sovereign debt.

The coordinated measures are aiming to curb Russia's ability to raise new foreign financing and plug some loopholes. Despite the limitations in the United States, Russia had been able to issue bonds in European markets.

Analysts at JPMorgan (NYSE:JPM) calculate that Russia has issued a combined 3.5 billion in euro-denominated bonds since 2020.

IMPLICATIONS FOR INVESTORS

Analysts see limited implications for holders of existing hard-currency bonds.

They, however, predicted the new U.S. sanctions on local sovereign bonds, so-called OFZs, would lead to the creation of two different classes of OFZs.

In response to the U.S. curbs on local sovereign bonds, the finance ministry said it would offer only new series of OFZs starting from Feb. 22 and stop tapping issues registered before this date "to lower risks of forced selling of circulating state securities by particular categories of foreign investors."

JPMorgan said that bonds which had been sold since mid-June had a 10-25 bps premium over existing issues, though this divergence faded, likely due to bonds being added to the most widely used emerging fixed income benchmark.

"However, premia may be more persistent this time given that new OFZs will not be index eligible," said Nicolaie Alexandru-Chidesciuc at JPMorgan. "As long as local banks can freely transact with foreigners the basis between the two curves should remain relatively narrow (within 20-30bp)."

WHAT DOES THIS MEAN FOR CAPITAL FLOWS?

Latest data shows that Russia has just under $40 billion in dollar and euro-denominated bonds outstanding, with just over half held by foreign investors. Positioning in those bonds by foreign investors looked light and the most underweight in two decades, according to a JPMorgan emerging market client survey.

Meanwhile foreign investors held around 18% or 2.8 trillion roubles ($34.4 billion) of overall outstanding OFZs, according to ING.

The new U.S. sanctions are not expected to trigger forced selling in OFZs. However, capital flows have shown investors ditched the bonds as tensions over Ukraine have escalated since late last year.

"Russia is now experiencing the fifth consecutive month of foreign portfolio outflows from OFZ," said Chris Turner, global head of markets at ING. "In October-January it totalled $5.4 billion, and since the beginning of February, some $1.1 billion were withdrawn."

Russia currently has a weight of 6.8% in JPMorgan's local sovereign debt benchmark, though given the U.S. measures would see no new issues added while existing ones would mature, the weighting was expected to shrink to below 5% in just over three years, the bank projected.

JPMorgan, which runs some of the most widely-used hard and local currency fixed income indexes in emerging markets, said on Wednesday it was reviewing the impact the new U.S. curbs may have on its emerging market benchmarks.

($1 = 81.3255 roubles)

✍️ Analysis of Oil on 24/02/2022:

🔺 About news:
 - Oil prices rose 5% on news of Russian military activity.  At noon on February 24, the price of Brent oil futures at one point exceeded $102 per barrel before falling slightly to $101.  Meanwhile, the price of WTI oil also increased by nearly 5%, to nearly 97 USD per barrel.

 - Analysts said that if the situation in Ukraine continues to be "hotter", it will trigger a wave of sell-offs in the stock market.  Investors will flock to safe havens like gold.  Oil prices will also skyrocket, even reaching 150 USD/barrel.

 - Armed conflict not only poses a risk to the facilities of the mining, refining and petrochemical industries, but also causes supply to be tighter if Russia responds to sanctions by "locking the valve" of oil.

 - Europe, which imports 25% of Russian oil and 40% of gas, will be severely affected if the Kremlin cuts off the supply of 3 million barrels of oil per day to this region.

 "Russia meets 30-40% of the gas needs of the whole of Europe every year.  No other country can replace it, even providing gas in the form of liquefied petroleum gas,” Al-Kaabi said.  “LNG trading contracts are signed in the form of a permanent, clear shipping location.  It is impossible to replace this huge amount of gas with LNG immediately.”

 👉 In short, through the above news, we can see that the picture of the crisis in energy is pushed to the climax and the possibility of a further increase of oil is completely happening.  On the technical chart, the nearest price level that oil is heading to is 105-110$ and if there is a slight decline to around 90-94$, this is the ideal price area for us to establish a buy position.  with the same goal as above!