It will not happen today or this month, but there is a growing sense of foreboding regarding equity markets. After the free cash run of the past two years valuations hit unsustainable levels. We have had corrections before, but stocks are so far only gradually pricing in what is the predominant risk for the Untied States: An aggressive rate hike cycle as it enters recession? The prospect of rampant inflation that demands significant and aggressive hikes, while at the same time the global economy and the US enter a slow-down created as a hangover result of the massive stimulus of recent years, and added to by on-going supply chain disruption and now the conflict in Ukraine, do not a favourable investment environment make. Fresh record highs were seen in New York in the first week of the year's trading. Ever since then it has been quite the rollercoaster, but with a persistent heavy bias. There was talk of war, but few really expected it to happen. Now that it is here, the ramifications for Europe and the global economy are far worse than anyone could have predicted. Energy prices look set to stay stubbornly high for the foreseeable future, and food availability and pricing has become a major issue. For the European economy, it really is about the blow-back effects of sanctions and in particular the impact on consumer and business sentiment. ‘Caution' will be the dominant response through the rest of this year. The European slowing will also flow through to the US economy and dampen equity market sentiment. If the US were to slip into some form of recession as well, alongside a permanently slowed China, one would be left asking, just why are stock prices so high? Do I really need to buy more stocks near record levels with rates going up, a war in Europe and a slowing global economy? The US stock market can most definitely fall a further 20% should the talk of recession start to look rather likely. The “great wash” of money is about to be unwound and the persistent bullish sentiment merely for the sake of it, could well leave equities as the Emperor with no clothes for 2022.

Those who’ve been long the US dollar index (DXY) since the middle of last year have done well for themselves. The DXY has gained 12% from its January 2021 swing low of 89.21 to trade close to 99.75 at the time of writing. Making similar gains from current levels will undoubtedly prove more challenging. Traders should be factoring this into their risk-reward assessments going forward for several reasons. First and foremost, as the DXY moves higher it’s likely to meet fierce resistance between the 100-103 range. In March 2020, dollar sellers were quick to step into the market when price attempted to breach the 103 level. Buyers may meet similar selling pressure on any re-attempt at these levels. Even more selling pressure is likely to arise toward the 103.8 level. Secondly, from a market structure perspective the uptrend in the DXY is a lot more recent than appears to the naked eye. The 94.74 September 2020 swing high of the previous downtrend was only breached in November last year. This alone would not be concerning if it weren’t for a bit of RSI divergence between the latest two swing highs raises questions about further momentum. Lastly, if indeed 99.418 represents the last true previous swing high and 97.685 the low in March, then traders are potentially facing a right-angled ascending broadening wedge pattern. Such a pattern adds a bit of ambiguity about further direction. All that said, the DXY is clearly in an uptrend and the long US dollar positioning that drove the DXY higher earlier in the year has faded. So, there is still scope for a further rise in price. Nevertheless, traders should certainly be taking note of some of the red flags being thrown by the latest leg higher in the DXY.

Overview:  Federal Reserve Governor Brainard's suggestion of a rapid unwind of the Fed's balance sheet stoked a bond market sell-off that is continuing today, rippling through the capital markets.  The US 10-year yield is rising for the fourth consecutive session.  The six-basis point gain today puts the yield near 2.62%, which represents a little more than a 25 bp increase since the jobs data on April 1.  European benchmark yields are 3-6 bp higher.  Japan's 10-year yield is poking above 0.23% to again challenge the BOJ's Yield Curve Control.  Equity markets are taking it on the chin.  The major markets in the Asia Pacific region fell, led by a 2%+ sell-off in Hong Kong. China's markets re-opened after a two-day holiday, and although the Shanghai and Shenzhen markets posted minor gains, the CSI 300 slipped by 0.3%.  Europe's Stoxx 600 is off around 1.1% and US futures are about 0.75% weaker.  The dollar is mixed.  The Swiss franc, Norwegian krone, and Japanese yen are weaker.  The Swedish krona, sterling, and euro are posting small gains.  Among the emerging market complex, the South African rand leads the few currencies higher.  Poland, which is expected to lift rates 50-75 bp today has not prevented the zloty from softening.  The Hungarian forint and Indian rupee lead the decliners today.  Gold is edging higher within its consolidative range, after the $1915 area held.  May WTI is firm near $104, but within yesterday's range (~$99.90-$105.60).  US natgas is extending yesterday's 5.6% gain by another 2% today. It is up roughly 40% since mid-March.  Europe's benchmark is snapping a three-day 13% decline with a 2.75% gain today.  Iron ore is off around 1.3%, while copper is slipping lower for the first time this week.  May wheat is paring the two-day 6% rise.   Asia Pacific China's mainland markets re-opened after the two-day holiday.  The news was poor.  The Caixin service and composite PMI were weaker than expected.  The services PMI slumped to 42.0 from 50.2. The composite dropped to 43.9 from 50.1.  In some ways, the news confirms what the market already knew in broad strokes.  The world's second-largest economy is struggling mightily as the zero-Covid policy is disrupting activity.  The lockdown in Shanghai, for example, has been extended.  The economic disappointment will underscore expectations for additional policy support.   New Zealand is placing a 35% tariff on imports from Russia while extending its export prohibitions.  Australia reports February trade figures tomorrow.  Weaker exports and stronger imports are projected to translate into a smaller surplus.  The new pact between the US, UK, and Australia (AUKUS) is not just about the nuclear-powered submarines.  It was announced that they are also working on developing hypersonic weapons.  Meanwhile, a Quad (Australia, Japan, India, and the US) meeting slated for next month may be delayed until after the Australian election.  This also means that US President Biden's first trip to Japan will also be rescheduled.   Rising US yields have helped lift the greenback to JPY124.  The dollar's multiyear high set in late March was almost JPY125.10.  The market looks set to challenge it again and a marginal new high is possible.  Recent comments by the Minister of Finance and the BOJ Governor show continued sharp depreciation of the yen is not desirable.  A month ago, the dollar was near JPY115.  The Australian dollar surged yesterday as the central bank appeared to signal the likelihood of an earlier hike, but it is trading quietly today.  The Aussie is in around a 15-tick range on either side of $0.7575.  Although it reached $0.7660 yesterday, the $0.7600 area may offer a cap today.  China's mainland market re-opened today, and the dollar initially jumped to a five-session high near CNY6.3765.  It spent the local session drifting lower and is now near CNY6.3600, back within the April 1 range.  The PBOC set the dollar's reference rate at CNY6.3799.  The median projection (Bloomberg survey) was CNY6.3791.  Europe German factory orders slumped 2.2%. It was the first decline in four months.  The median forecast (Bloomberg) anticipated a 0.3% decline.  The January series was revised to 2.3% from 1.8%, offering a small consolation.  Domestic orders fell for the second consecutive month, while foreign orders slid 3.3%.  That said, foreign orders have been alternating between gains and losses since at least last August.  A group of economic advisers to the German Chancellor cut this year's growth forecast to 1.8% from 4.6%, while warning that a recession was possible.  Tomorrow, Germany is to report February industrial production figures.  The median forecast is for a 0.2% gain after the 2.7% surge in January.  The risks are on the downside.  Note that yesterday, France reported February industrial output fell by 0.9%, three-times the decline the median forecast anticipated.  The aggregate report is due next week.  Poland's central bank is expected to...

A combination of factors dragged EUR/USD to a four-week low on Wednesday. The Ukraine crisis, uncertainty over the French elections weighed on the euro. Hawkish Fed expectations, the risk-off mood boosted the safe-haven greenback. Investors now look forward to the FOMC meeting minutes for a fresh impetus. The EUR/USD pair added to its recent heavy losses and dropped to a four-week low, just below the 1.0900 mark during the Asian session on Wednesday. The shared currency was weighed down by fading hopes for a diplomatic solution to end the war in Ukraine, which, along with a strong US dollar rally, exerted downward pressure on the major. In the latest developments surrounding the Russia-Ukraine saga, the European Union announced new sanctions against Russia over its alleged war crimes in the Ukrainian town of Bucha. The sanctions include a ban on Russian coals, access to EU ports and transactions of four key Russian banks. Apart from this, worries about the outcome of the French elections turned out to be another factor that undermined the euro. The latest opinion polls indicated that French President Emmanuel Macron's far-right Eurosceptic rival, Marine Le Pen, has been closing the gap ahead of the first round on Sunday. On the other hand, the greenback continued drawing support from firming expectations that the Fed would adopt a more aggressive policy stance to combat stubbornly high inflation. The bets were reaffirmed by hawkish comments from Fed Vice Chair Lael Brainard. She said that the Fed would continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as the May meeting. The markets quickly reacted and pushed the yield on the 2-year US government bond - which is highly sensitive to rate hike expectations - to its highest level since January 2019. Moreover, the yields on the 5-year and the benchmark 10-year bonds shot to their highest level since December 2018 and April 2019, respectively. This, along with a sell-off in the US equity markets, underpinned the safe-haven buck and further contributed to the offered tone surrounding the major. There isn't any major market-moving economic data due for release from the Eurozone on Wednesday, leaving the pair at the mercy of the USD price dynamics. Later during the US session, investors will take cues from the FOMC monetary policy meeting minutes. The incoming geopolitical developments would influence the pair and allow traders to grab some short-term opportunities. Technical outlook From a technical perspective, the sustained overnight breakthrough, the 1.0960 horizontal support and a subsequent slide below the 1.0900 mark favour bearish traders. With technical indicators holding deep in the negative territory and still far from being in the oversold zone, the pair seems vulnerable to sliding further towards the mid-1.0800s. The downward trajectory could further extend towards challenging the YTD low, around the 1.0800 round-figure mark touched on March 7. On the flip side, attempted recovery moves might now confront immediate resistance near the 1.0960 support breakpoint. Any further move up is more likely to meet with a fresh supply and remain capped near the 1.1000 psychological mark. Some follow-through buying would negate the bearish bias and prompt some short-covering move. The pair could then climb to the next relevant hurdle near the 1.1040 region before aiming back to reclaim the 1.1100 round-figure mark.

FOMC will release the minutes of the March policy meeting on April 6. CME Group FedWatch Tool points to a more-than-70% probability of a 50 bps hike in May. US Dollar Index stays within a touching distance of multi-year highs. The greenback has started the month of April on a firm footing on the back of the latest data releases from the US and rising odds of a 50 basis points (bps) Federal Reserve rate hike in May. The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of six major currencies, is already up nearly 1% since the beginning of the month. The Fed will release the minutes of the March policy meeting at 1800 GMT on Wednesday, April 6. On March 16, the Fed decided to hike its policy rate by 25 bps to the 0.25%-0.5% range as expected. The Summary of Economic Projections, the so-called dot plot, revealed that the median view of the Fed funds rate at the end of 2022 was raised to 1.9% from 0.9% back in December. According to the dot plot, policymakers see the Fed hiking its policy rate by 25 bps at every meeting for the rest of the year. Since the March meeting, however, conditions have changed and investors started to evaluate the prospects of double-dose rate hikes. The US Bureau of Economic Analysis reported on March 31 that the annual inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, climbed to 6.4% in February. More importantly, the Core PCE Price Index, the Fed’s preferred gauge of inflation, rose to 5.4% from 5.2% in January. It’s worth noting that the latest PCE inflation data do not reflect the impact of the Russia-Ukraine conflict and the coronavirus-related lockdowns in China on price pressures. It would be plausible to assume that inflation has more room to rise before finally starting to retreat. Additionally, the March jobs report revealed that the labor market conditions continued to tighten. Nonfarm Payrolls rose by 431,000, the Labor Force Participation Rate stayed virtually unchanged at 62.4% and the annual wage inflation climbed to 5.6% from 5.2% in February. At the post-FOMC press conference, FOMC Chairman Jerome Powell acknowledged that it was possible for the Fed to move rates up more quickly to tame inflation. Several Fed policymakers, including Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, voiced their willingness to frontload rate increases to preserve the Fed’s credibility and ease price pressures. As it currently stands, the CME Group FedWatch Tool shows that markets are pricing in a 74.4% probability of a 50 bps rate hike in May. Hawkish scenario The Fed may have backed itself into a 25 bps hike by dismissing the possibility of a 50 bps hike in its pre-meeting communication in March. In case the minutes show that policymakers considered a bigger rate increase but ended up voting for a 25 bps one to avoid a big market reaction, US Treasury bond yields could continue to rise and provide a boost to the dollar.  Market participants will also pay close attention to details surrounding the Fed’s plan to shrink the balance sheet. Powell noted that they will need to reduce the $8.9 trillion balance sheet to make sure high inflation does not become entrenched and NY Fed President John Williams said they could start doing that as early as May. The greenback could continue to find demand if the publication unveils that policymakers are willing to make large cuts to the balance sheet in the second half of the year.  Dovish scenario Policymakers are worried about a prolonged Russia-Ukraine conflict weighing on global economic activity. Powell, however, explained that they were more concerned about the impact of the crisis on inflation rather than growth. A cautious language on future rate increases amid heightened uncertainty could be seen as a dovish development and trigger a dollar selloff.  DXY Technical Outlook  DXY closed above the 20-day SMA on Monday after staying below that level in the previous three trading days. Confirming the bullish shift in the near-term technical outlook, the Relative Strength Index (RSI) indicator advanced to 60. On the upside, 99.40 (static level, multi-year high set in early March) aligns as first resistance. With a daily close above that level, the index could target 100.00 (psychological level) and 100.40 (static level). In case the dollar faces selling pressure on a dovish surprise, DXY could drop to 97.80 (static level). If sellers manage to flip that level into resistance, further losses toward 97.30 (50-day SMA) and 96.70 (100-day SMA) could be witnessed.   

Overview: Watch the video for a summary of this week’s news releases, a review of the USD index, and a complete top down analysis of the EURUSD.

AUD/USD Current Price: 0.7546 The aussie outperformed its major counterparts, rallying against the greenback. The Reserve Bank of Australia will announce its decision on monetary policy on Tuesday. AUD/USD tested the 0.7555 resistance level and could break beyond it with the RBA. The AUD/USD pair peaked at 0.7555, a fresh 2022 high and matching October 2021 monthly top. The aussie outperformed its major counterparts against the dollar, as most major pairs held within familiar levels, but AUD/USD added roughly 80 pips on a daily basis. The positive tone of Wall Street, despite mostly modest gains, could have helped the pair. On the data front, Australia published March TD Securities Inflation, which rose 4% YoY from 3.5% in the previous month. The country will publish the March AIG Services PMI and the S&P Services PMI for the same month. Additionally, the Reserve Bank of Australia will announce its decision on monetary policy. The central bank is widely anticipated to maintain the cash rate on hold at 0.1%. Overall, market players are expecting policymakers to maintain their cautious stance amid the Eastern Europe crisis and the upcoming Federal election in the country. Most analysts expect the central bank to start normalizing the monetary policy by August, although keeping in mind that the RBA will probably move slowly. AUD/USD short-term technical outlook The AUD/USD pair holds on to most of its Monday’s gains, trading around 0.7540 while heading into the Asian opening. The daily chart hints at further gains ahead as technical indicators resumed their advances near overbought readings. At the same time, the pair is developing above all of its moving averages, with the 20 SMA extending its advance above the longer ones. The 4-hour chart shows that the pair is comfortable above a flat 20 SMA, while the longer ones advance below it. Technical indicators have partially lost their bullish strength but hold within positive levels, reflecting the absence of selling interest. A break through the 0.7555 level should lead to a steeper advance towards 0.7630. Support levels: 0.7505 0.7465 0.7430 Resistance levels: 0.7555 0.7590 0.7630 View Live Chart for the AUD/USD

In this article, we will examine the links between Russia, Ukraine and various European countries in order to evaluate the latter’s exposure to the economic repercussions of Russia’s military offensive in Ukraine since 24 February. To do so, we look at imports of goods from Russia and Ukraine and the weight of energy and food components in the consumer price index1. The first series of indicators on imports gives us an assessment of the direct trade exposure of European countries, particularly when it comes to energy and food products, which are widely imported from Russia and Ukraine. The second series, examining the weight of energy and food in consumer spending, offers insight into the potential inflationary effects from the price shocks on the global commodities markets, which the war has amplified. By presenting these indicators in the form of a heatmap, we can easily compare the level of exposure to Russia and Ukraine of all European countries. Where the data is available, we have also included the US, UK and China. Some indicators are broken down into sub-components to refine the comparison. For the six categories of trade in goods2, we distinguish between (i) the share of a given product in total imports from Russia or Ukraine and (ii) the share of a country’s total imports of a given product which comes from Russia or Ukraine. Linking these two variables allows us, for example, to analyse the weight of energy in trade between Russia and European countries: in 2019, 75% of EU imports from Russia were energy products, whilst 19% of total EU energy imports came from Russia. Within the table we also break down the “energy products” line by identifying the energy mix: the share of gross domestic energy consumption contributed by each of the three main fossil fuel types–natural gas, oil and coal. We also show the share of each fuel type imported by a country and the share that comes from Russia. These two complementary measures allow us to compare the dependence on imports of a specific energy source and its significance for the energy mix of a given country. A country that is both a heavy gas user and a big customer of Russian gas will be significantly more exposed than others. This is the case for Latvia and Slovakia, where gas makes up more than a quarter of the energy mix and all of it is imported from Russia. Conversely, in some countries, including Austria, Denmark and Croatia, gas makes up a non-negligible share of the energy mix, but it is not imported from Russia3. We carried out a similar analysis for Ukraine. Unlike Russia, which is a major supplier of energy products, Ukraine mainly supplies the EU with agricultural and food products, which represented nearly one third of the EU’s imports from Ukraine in 2019. We look at three major groups of agricultural products imported by the EU from Ukraine: cereals (corn, wheat, barley, oats, etc.), grains (soy, peanuts, rapeseed, sunflower, etc.), and animal and vegetable proteins. For these three product groups, we distinguish between (i) the share of a given product in total imports from Ukraine and (ii) the share of a country’s total imports of the product which comes from Ukraine. With regards to the weight of energy and food in the consumer price index – indicative of the inflationary impact – Romanian, Latvian, Slovak, Bulgarian, Hungarian and Lithuanian households’ purchasing power is the most exposed (30% of consumption goes on these basic items). To establish a final ranking of the level of exposure of EU member states to Russia and Ukraine, we calculated an average of the positions for a given country for each of the 23 variables studied. The higher up the ranking a country is, the more dependent it is on Russia or Ukraine. This composite indicator confirms the significant exposure of countries close to Russia and Ukraine (Lithuania, Latvia, Estonia, Bulgaria, Finland, Poland [see charts 1 and 2]). It is also important to highlight the double exposure of the Baltic States to both Russia and Ukraine: a country heavily dependent on Russia is also dependent on Ukraine (see chart 3). Western European countries have less exposure, although there are significant differences, with Germany and Italy being more dependent on Russian gas than France, Spain or Portugal. The exposure of European countries to Russia and Ukraine results primarily from their imports of Russian energy supplies and Ukrainian food and agricultural products. European countries’ dependence on Russian gas, coal and oil contributes significantly to the EU’s trade deficit with Russia (EUR49 billion in 2019). European countries are exposed and penalized, on the one hand, by the rise in prices of these products (caused by the conflict which is a source of additional inflation) and, on the other hand, by the...

A combination of factors dragged EUR/USD lower for the second straight day on Friday. A positive risk tone capped the safe-haven USD and extended some support to the pair. The Russia-Ukraine crisis should continue as a headwind for the shared currency. The EUR/USD pair added to the previous day's heavy losses and edged lower for the second successive day on Friday amid fading hopes of diplomacy in Ukraine. Investors remain worried that the European economy, which relies heavily on Russia to meet its energy needs, will suffer the most from the spillover effect of the Ukraine crisis. This, in turn, acted as a headwind for the shared currency, which, along with modest US dollar strength, exerted some downward pressure on the major. Bulls seemed rather unimpressed by hotter-than-anticipated Eurozone consumer inflation figures. According to the flash estimate, the Harmonised Index of Consumer Prices (HICP) accelerated sharply to 7.5% YoY in March. This was well above consensus estimates, pointing to a rise to 6.6% from the previous month's upwardly revised reading of 5.9%. However, the Core HICP missed market expectations and rose 3% during the reported month from 2.7% in February. From the US, the monthly jobs data showed that the economy added 431K jobs in March as against the 490K expected. To a more significant extent, the disappointment was offset by an upward revision of the previous month's reading to 750K from the 678K reported earlier. The unemployment rate fell to 3.6% from 3.8% earlier, while Average Hourly Earnings rose 0.4% MoM compared to the 0.1% increase in February. The data reaffirmed bets for a more aggressive tightening by the Fed. The markets seem convinced that the Fed would hike interest rates by 100 bps over the next two meetings to combat high inflation. This, in turn, pushed the yield on the two-year US government bond to a three-year peak and further underpinned the buck. That said, a positive risk tone capped the safe-haven greenback. Apart from this, speculations that the ECB will scale back its ultra-loose policy as soon as year-end to tame surging inflation extended some support to the pair. However, any meaningful upside still seems elusive amid talk of bans on Russian gas. The EU gets about 40% of its gas and 30% of its oil from Russia and has no easy substitutes if supplies are disrupted. This, in turn, should hold back traders from placing any aggressive bullish bets around the common currency. Hence, the market focus will remain glued to new developments surrounding the Russia-Ukraine saga, which should provide some impetus and the USD price dynamics. Technical outlook From a technical perspective, acceptance below the 38.2% Fibonacci level of the recent sharp pullback from the vicinity of the 1.1500 psychological mark favours bearish traders. Hence, a subsequent slide below the 1.1030-1.1025 intermediate support remains a distinct possibility en-route the key 1.1000 psychological mark. The following relevant support is pegged near the 23.6% Fibo. level, around the 1.0970 area, which will reaffirm the near-term negative bias if broken decisively. The pair would turn vulnerable to accelerate the fall towards the 1.0900 mark before eventually sliding to the 1.0860 support en-route the YTD low, around the 1.0800 mark touched on March 7. On the flip side, any meaningful move back above the 38.2% Fibo. level, around the 1.1065-1.1070 region, now seems to confront stiff resistance near the 1.1100 mark. Sustained strength could allow bulls to aim back to test the 50% Fibo. level, around mid-1.1100s. This is followed by last week's swing high, around the 1.1185 region, and the 1.1200 mark, which, if cleared decisively, should pave the way for a move towards the 61.8% Fibo. level, around the 1.1230-1.1235 zone. The upward trajectory could then push spot prices towards the 1.1300 round figure.

Non-farm payrolls marginally below expectations Non-farm payrolls marginally fell below market expectations on Friday, as February’s number was upwardly revised. Figures from the Labor Department reported that 431,000 jobs were added to the U.S. economy in March, which is slightly below estimates of 490,000 . This comes as February’s final payroll number was also updated, and now shows an addition of 750,000, versus 698,000 as initially stated. Overall, the report was positive for the U.S. economy, and markets in general, which has been nervy, following the fall out of the Russia/Ukraine war.  As of writing, the S&P 500 was trading 0.26% lower. DAX 30 up, despite Eurozone inflation hitting highs Germany’s DAX 30 was marginally higher on Friday, despite news that inflation in the Euro area had risen to historical highs.  The data showed that the consumer price index in the eurozone rose to 7.5% from the same point last year. This came as it climbed by 2.5% last month, as a result of the Russia/Ukraine war, which sent energy prices to multi-year highs. News of this was followed by the IHS Markit PMI survey, which came in at 56.5, which is its lowest level in over a year. The DAX closed 0.22% higher on the news.  

EUR/USD, “Euro vs US Dollar” EUR/USD is still forming the descending structure towards 1.1053. After that, the instrument may start another correction to reach 1.1092 and then resume trading downwards with the target at 1.1015. GBP/USD, “Great Britain Pound vs US Dollar” After completing the correctional wave at 1.3174, GBPUSD is forming a new descending structure towards 1.3080. Later, the market may correct to reach 1.3100 and then resume trading downwards with the target at 1.2993. USD/JPY, “US Dollar vs Japanese Yen” USD/JPY has finished the correctional structure at 122.60. Possibly, today the pair may start another decline with the short-term target at 120.80. USD/CHF, “US Dollar vs Swiss Franc” USD/CHF is consolidating around 0.9227. Today, the pair may form one more ascending wave towards 0.9262. Later, the market may start a new decline to reach 0.9180 and then resume growing with the target at 0.9277. AUD/USD, “Australian Dollar vs US Dollar” AUD/USD is still consolidating around 0.7495. Possibly, the pair may fall to break 0.7450 and then continue trading downwards with the target at 0.7400. Brent Having completed the ascending impulse at 114.44, Brent is correcting down to 105.00. After that, the instrument may start another growth to break 114.44 and then continue moving within the uptrend with the target at 122.22. XAU/USD, “Gold vs US Dollar” Gold has finished the ascending impulse at 1938.30; right now, it is correcting and may later reach 1933.68. After that, the instrument may form one more ascending wave to break 1975.90 and then continue trading upwards with the target at 2009.10. S&P 500 The S&P index continues falling towards 4512.3 and may later grow to reach 4577.0. After that, the instrument may resume trading downwards to break 4368.7 and then continue moving within the downtrend with the target at 4140.0.

EUR/USD, H4 The peace talks between Russia and Ukraine in Istanbul appear to have been just a delay tactic in order for Russia to adjust its military position. As expected by many parties, the retreat from the area near the capital Kiev turned into an increase in troops in the Ukrainian naval sector. In addition to this, Russia continues to emphasize a desire for oil and gas buyers to pay in rubles and as a result, the ruble is now strengthening to pre-war levels again. The US stock market and closed for the second consecutive day over -1.55%. Such concerns caused the euro to weaken again yesterday against other major currencies, especially safe-haven currencies. EURJPY dropped to a low of 134.50 before bouncing back to 135.20 now. EURCHF made a fresh weekly low of 1.0206, now at 1.0230, while the EURUSD pair has fallen to 1.1050 from the three-week high zone at 1.1180. Meanwhile the US Dollar was back in demand as a safe-haven currency with a boost from yesterday’s US economic data. Key inflation figure, the PCE, climbed to a four-decade high of 6.4 percent annually, as did the Chicago PMI, which rose higher than expected at 62.9, compared with 57.0 and 56.3 the previous time. However, weekly unemployment claims rose slightly higher than expected at 202K versus 197K and 188K the previous week. Today, Eurozone HICP inflation jumped to record high of 7.5% in March, while the February number was revised up to 5.9% from 5.8% reported initially. While the headline was markedly higher than initially anticipated, Core actually was a tad lower than feared, although it still lifted to 3.0% from 2.7%. Excluding energy, core lifted to 3.4% and the preliminary breakdown revealed a 5% rise in food prices, alongside a 44.7% jump in energy prices. The spike in the cost of living is squeezing disposable income and weighing on consumer confidence as survey data clearly indicated. That will weigh on demand and hit the services sector at a time when manufacturers are struggling with the fallout form the Ukraine war and the sanctions on Russia. Against that background, ECB chief economist Lane continues to stress the temporary factors that are driving the uptick and this week effectively removed the tightening bias, when he said the ECB needs to be ready to move in either direction. The comments were clearly designed to prepare the ground for a high inflation report and prevent markets from running away with the tightening story. With a war on the Eurozone’s doorstep, the negative implications on the growth outlook will be much more pronounced than in the US and that means policy divergence and ongoing accommodation for the ECB, even as the Fed is continuing to remove stimulus. The focus for today will be on the March Non-Farm jobs numbers, which are expected to increase to 490K from February’s 678K. Other labour figures are also included, including ISM Manufacturing PMI. Technically speaking, the EURUSD pair in the H4 timeframe is now stuck between the MA50 and MA200 lines where the RSI has flattened near the 50 level, indicating a potential short-term retracement in the price ahead of this evening’s important event. In the Day timeframe, a bearish flag pattern is seen, indicating an opportunity for the price to continue in a medium-term downtrend. The first support today is at the round 1.1000 and the next one is at the Week low at 1.0945, while the key resistance stands at 1.1100 which converges with the MA200 line. If broken, the next resistance Is at the high zone before 1.1180.