A combination of factors prompted aggressive selling around EUR/USD on Thursday. Fading hopes for peace in Ukraine weighed heavily on the euro and exerted pressure. The risk-off impulse, Fed rate hike bets boosted the USD and added to the selling bias. Traders now seem to have moved on the sidelines ahead of the US monthly jobs data. The EUR/USD pair witnessed a dramatic turnaround on Thursday and plunged nearly 125 pips from the fresh monthly peak, around the 1.3185 region amid fading hopes for a de-escalation in the Ukraine war. In the latest developments, Russian President Vladimir Putin struck back at Western sanctions and threatened to halt contracts supplying natural gas unless they are paid in roubles. 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, fueled worries that the European economy would suffer the most from the spillover effects of the Ukraine crisis and weighed heavily on the shared currency. The uncertainty over Ukraine took its toll on the global risk sentiment, which was evident from a sharp fall in the equity markets. The anti-risk flow boosted demand for traditional safe-haven assets, including the US dollar, which was seen as another factor that exerted additional downward pressure on the major. The greenback was further underpinned by expectations that the Fed would adopt a more aggressive policy stance to combat high inflation. In fact, the markets have been pricing in a 50 bps Fed rate hike move at the next two meetings. The bets were reaffirmed by Thursday's release of the US Core PCE Price Index, which rose to 5.4% YoY in February from the 5.2% previous. The pair finally settled near the lower end of its daily trading range and snapped two successive days of the winning streak. Spot prices oscillated in a narrow trading band through the Asian session on Friday as traders preferred to move on the sidelines ahead of the release of the closely-watched US monthly jobs data. The popularly known NFP report is expected to show that the US economy added 490K jobs in March, down from 678K in the previous month. Meanwhile, the unemployment rate is anticipated to edge lower to 3.7% from 3.8% in February. The data would influence the Fed's policy outlook and drive the USD demand, which, in turn, should provide a fresh directional impetus to the major. Technical outlook From a technical perspective, the pair, so far, has been struggling to find acceptance above the 50% Fibonacci level of the recent sharp pullback from the vicinity of the 1.1500 psychological mark and faced rejection near the 50-day SMA. The subsequent decline, however, stalled near the 38.2% Fibo. level. Adding to this, neutral technical indicators on the daily chart warrant caution for aggressive traders. Hence, it will be prudent to wait for some follow-through selling before positioning for the resumption of the downtrend witnessed since early February. In the meantime, any subsequent decline is likely to find some support near the 1.1030-1.1025 region ahead of the 1.1000 round figure and the 23.6% Fibo. level, around the 1.0970 area. A convincing break below will shift the bias back in favour of bearish traders and make the pair vulnerable to accelerate the fall towards the 1.0900 mark. The downward trajectory could further get extended and drag the pair towards the 1.0860 intermediate support en-route the YTD low, around the 1.0800 mark touched on March 7. On the flip side, the 1.1100 round-figure mark now seems to act as immediate strong resistance. Sustained strength beyond could allow bulls to aim back to test the 50% Fibo. level, around mid-1.1100s. This is followed by the overnight 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 further get extended and eventually push the pair towards the 1.1300 mark.

A ceasefire followed by a frozen conflict would embolden the dollar and oil bid, weighing on stocks. Ukrainian surrender would have similar implications, especially for oil. If both sides reach a deal, markets would surge, gold and oil would tumble. NATO involvement in the war would crash markets, boost all the others. An unlikely regime change in Russia would send oil tumbling down, boost stocks. How will the Russia-Ukraine war end? This is a question on everybody's minds, with no clear answer – it is hard to know what is going in the head of Vladimir Putin, Russia's President. However, these five scenarios offer potential scenarios for markets and the main assets: stocks, gold, oil, and the US dollar.  1) Ceasefire and frozen conflict Russian and Ukrainian officials have been in touch almost since the day Moscow ordered its troops to capture Kyiv, but talks have been fruitless so far. However, occasional reports of progress and the fact a dialogue exists, open the door to a ceasefire.  A halt to hostilities would be seen as the first step toward a long-term resolution, but it may turn into a frozen conflict, similar to the one in Ukraine's Donbas region, which is going on since 2015. Occasional skirmishes, the lack of a Russian retreat and would turn an initial cheer in markets to a gradual slump. Ongoing Western sanctions, the risk of an outburst of a fresh full-scale war and uncertainty would keep oil and gas prices bid. The dollar tends to benefit in times of uncertainty, and the Federal Reserve's likely tightening – related to higher energy prices but also to domestic pressures – would further boost the greenback.  Gold might suffer a blow from a ceasefire, and then gradually retreat, as Russia's Central Bank's vast reserves of the precious metal could be sold to finance the choked economy.  Probability: High – that is what happened not only in Donbas but also in parts Russia tore out of Georgia.  2) A deal is struck People around the world and markets would make a collective sigh of relief if hostilities ended with a long-term deal. While many would suspect that any accord would hold, markets react first and fast, ask questions later.  Stocks would soar and oil prices would tumble down, as Russia would return to global markets at some capacity. An agreement in Europe would also enable one with Iran, adding more capacity to markets. Food prices would calm down. The dollar would initially crash amid a sell-off of safe assets, but would later rise as the Fed remains at the forefront of tightening. It is essential to note that US core inflation is higher than in many other countries, and that is what matters to the central bank. Gold could surprisingly rise at first, as a drop in inflationary expectations would send US yields lower. However, the Fed's tightening path and a lack of safe-haven appeal would eventually weigh on the precious metal. Probability: Medium-high – a Ukrainian constitutional pledge to refrain from entering NATO while joining the EU and having Russia retreat from most of its land could be the basis for a deal.  3) Ukrainian surrender Most of the world would be devastated if the courageous Ukrainians raise the white flag, but their motivation could be outweighed by the scale of Russia's firepower. Such a scenario would keep Russia isolated and the West could move to ban imports of goods coming from occupied Ukraine. That would not only push oil and gas prices further up but also send food prices soaring, causing recessions in many countries, a potential upheaval that would also force the Federal Reserve to enact looser policy.  If central banks provide support, the dollar would lose some of its ground. The greenback would also tumble as a complete surrender would provide more certainty than a ceasefire that could be violated at any moment. Such certainty – of an isolated, yet larger Russia – would eventually be beneficial for US stocks. America's economy is less dependent on Russia than Europe or the Middle East.  Gold would be less of a safe haven, falling more than in the previous scenario.  Probability: Medium – it was the leading scenario before the war, but now Moscow understands regime change in Kyiv is hard.  4) NATO gets involved in the war It does not need to turn into a nuclear war – in that case, investments and money would not matter at all. However, if Russia uses chemical weapons and the West decides to act, or if a miscalculation by either side results in a direct clash between US and Russian aircraft, the conflict would widen dramatically.  It would cause shares to suffer a massive crash, perhaps resulting in a pause in trading. The safe-haven dollar would find even more demand,...

AUD/USD Current Price: 0.7490 Crude oil tumbles on US announcements oversupply of 180 million barrels from strategic reserve over the next six months. US core PCE inflation rises to 5.4% YoY in February. AUD/USD bears move in ahead of Nonfarm Payrolls.  The AUD/USD pair has been under pressure on Thursday as commodity prices take a raincheck. Hopes from earlier this week that peace talks would lead to a ceasefire in Ukraine five weeks after Russia's invasion have dwindled, yet, oil prices are under pressure due to the US announcing they will release up to 180 million barrels of oil from their strategic reserve over the next six months in an effort to combat the surge in oil prices.  As a result of the Russian invasion of Ukraine, oil spot prices had rallied from around $75/bbl at the start of 2022 to a peak of above $130/bbl, but in the wake of the US announcement, oil prices were down over 5% overnight, with WTI trading at USD99.69bbl the low on the day.  Additionally, US stocks were poised to end the biggest quarterly decline in two years on a down note on Thursday as worries about the continuing conflict in Ukraine. AUD is a high beta currency, correlated to equities that have been sensitive to any signs of progress toward a deal to resolve Russia's invasion of Ukraine.  Meanwhile, US personal spending rose, as expected, by 0.6% in February from 0.5% in the previous month, the Bureau of Economic Analysis said. The year-over-year rate jumped to 6.4%, the steepest in a month since 1982, from 6% in January. This is US Federal Reserve's favoured inflation measure, the PCE deflator, and it has lifted to 6.4% YoY in February (6.0% previously), in line with expectations. Core inflation rose to 5.4% YoY (5.2% previously). The PCE is the broadest measure of inflation and it is running at three times the Fed's target rate, feeding into US dollar bullishness ahead of Friday's Nonfarm Payrolls. Employment in the US likely continued to advance in March following two strong reports averaging +580k in Jan and Feb and a new drop in the unemployment rate to a post-COVID low would be expected to support the greenback further. AUD/USD short-term technical outlook The daily chart shows that the price is under pressure below a wall of resistance. This puts the focus on the downside and to the prior resistance that has a confluence with the 50% mean reversion target. The 21-day moving average is aligned in this area as well for additional confluence. 

Daily market outlook on major Update Time: 31 Mar 2022 03:00GMT EUR/USD - 1.1167 Euro's rally above previous resistance at 1.1137 to a 4-week high at 1.1170 in New York yesterday on broad-based retreat in usd suggests corrective upmove from March's fresh 22-month 1.0807 bottom remains in force and further gain to 1.1200/05 may be seen before prospect of decline later due to loss of upward momentum. On the downside, a daily close below 1.1100 signals a temporary top is made and risks stronger retracement to 1.1071/72, break, 1.1045. Data to be released on Thursday Japan industrial output, housing starts, construction orders, Australia building permits, China NBS non-manufacturing PMI, NBS manufacturing PMI. U.K. nationwide house price, Swiss retail sales, France producer prices, CPI, consumer spending, Germany retail sales, unemployment rate, unemployment change, Italy CPI, unemployment rate, EU unemployment rate. U.S. continuing jobless claims, initial jobless claims, PCE price index, personal spending, personal income, Chicago PMI and Canada GDP.

Annual Core PCE inflation is forecast to rise to 5.5% in February. A strong inflation print could revive expectations of a 50 bps rate hike in May. Technical outlook points to a bearish tilt in the US Dollar Index.   The dollar has failed to build on the previous week’s gains and instead has lost nearly 1% in the first half of the week. In the absence of high-tier data releases, the positive shift witnessed in risk sentiment seems to be making it difficult for the dollar to find demand. On Thursday, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data for February. The Core PCE Price Index - the Fed’s preferred gauge of inflation that leaves out volatile food and energy prices - is expected to rise to 5.5% from 5.2% in January. Inflation and Fed rate outlook Following the FOMC’s March policy meeting, policymakers have adopted a hawkish tone by voicing their willingness to vote in favor of 50 basis points (bps) rate hikes in upcoming meetings to tame inflation. Chicago Fed President Charles Evans said that a 50 bps hike could help them move rates close to neutral. Cleveland Fed President Loretta Mester argued that it would be a good idea to “frontload” some of the rate hikes and added that double-dose rate increases will be needed this year. On a similar note, “if we need to raise the Fed funds rate by more than 25 bps, we will do so,” FOMC Chairman Jerome Powell said. Earlier this month, the US Bureau of Labor Statistics (BLS) reported that inflation in the US, as measured by the headline Consumer Price Index (CPI), jumped to a multi-decade high of 7.9% on a yearly basis in February, from 7.5% in January. The US Dollar Index (DXY) gained more than 1% in the next 48 hours after this data. The CME Group FedWatch Tool shows that markets are currently pricing in a 66% probability of a 50 bps rate hike in May. In case Thursday’s report reveals that the Core PCE Price Index rose at a stronger pace than expected in February, odds of a 50 bps rate hike in May could continue to increase. In that case, the US Treasury bond yields should gain traction and provide a boost to the dollar. The benchmark 10-year US T-bond yield reached a multi-year high above 2.5% early Monday but retreated to 2.4% mid-week. On the other hand, a soft PCE inflation print could have the opposite effect on US yields and force the greenback to stay on the back foot. It’s worth noting, however, that the February data will not reflect the impact of the Russia-Ukraine conflict on overall price pressures. Hence, investors might refrain from committing to a long-lasting dollar selloff. Moreover, the market reaction could remain muted due to the fact that the US Bureau of Labor Statistics will release the March jobs report on Friday. DXY Technical Outlook Following the sharp decline witnessed in the first half of the week, the Relative Strength Index (RSI) on the daily chart fell below 50 for the first time since mid-February. Confirming the bearish shift in the technical outlook, the DXY is now well below the 20-day SMA. 97.50 (Fibonacci 38.2% retracement level of the latest uptrend) aligns as key support. With a daily close below that level, the index could extend its slide toward 97.00 (psychological level, Fibonacci 50% retracement, 50-day SMA) and 96.50 (100-day SMA, Fibonacci 61.8% retracement). On the upside, the DXY needs to rise above 98.25 (Fibonacci 23.6% retracement) and start using that level as support in order to target new multi-year highs above 99.00. The 20-day SMA near 98.50 could act as interim resistance as well.   

The long end of the yield curve rallied strongly on Tuesday with the middle of the curve pricing in more hikes by the Fed. More inversions signal a recession sooner rather than later. Yield Curve data from the New York Fed as of 2022-03-29, yellow highlights mark Inversions, chart by Mish The highly watched 2-10 spread was positive 6 basis point (2.41 minus 2.35) as of the close on March 29 having briefly inverted (negative) intraday.  Yield Curve Spreads Since January 2021 Yield Curve Spreads Since January 2022 Yield Curve data from the New York Fed as of 2022-03-29, chart and calculations by Mish Six Inversions  20-Year to 30-Year: 15 Basis Points  7-Year to 10-Year: 9 Basis Points 5-Year to 10-Year: 8 Basis Points 5-Year to 3-Year: 5 Basis Points 3-Year to 10-Year: 13 Basis Points 3-Year to 30-Year: 1 Basis Point   Inversions (shorter-duration bonds yielding more than longer-duration bonds) are a sign of a weakening economy and a recession.  The most widely watched recession harbinger is the 2-10 spread which briefly inverted intraday on March 29 but finishing the day at a positive 6 basis points. Recession Coming A recession is on the way. The only question is whether it hits in 2022 or 2023.  The answer to the question "when?" depends on how fast the the Fed hikes and how resilient the housing and stock market bubbles are to Fed hikes.  2022 is looking increasingly likely.  Meanwhile the housing bubble keeps expanding while the stock market shrugs off the expected hikes.  For more on housing, please see 2021 Set New Annual Records for Home Prices. 2022 Continues the Trend.

Hopes for diplomacy in Ukraine triggered aggressive short-covering on EUR/USD on Tuesday. Surging German bond yields further underpinned the euro and remained supportive of the move. The risk-on impulse, retreating US bond yields weighed on the USD and fueled the momentum. The EUR/USD pair witnessed an aggressive short-covering move on Tuesday and rallied to a two-week high amid hopes for a breakthrough in the Russia-Ukraine peace negotiations. In the latest development, the Russian Defense Ministry promised to scale down military activity in Kyiv and Chernihiv to create conditions for dialogue. Adding to this, top Russian negotiator Vladimir Medinsky was quoted saying that there have been enough developments to hold a meeting between President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskyy. The headlines fueled optimism about a diplomatic solution to end the war and provided a strong boost to the euro, which has been battered in recent weeks amid fears about the economic fallout from the Ukraine crisis. The common currency was further underpinned by surging German government bond yields. The yield on two-year notes briefly moved above zero for the first time since late 2014 and the benchmark 10-year bund yield shot to levels last seen in 2018. The positive news flow surrounding the Russia-Ukrain saga raised expectations that the European Central Bank will scale back its ultra-loose monetary policy as soon as year-end to tame surging inflation. Apart from this, a broad-based US dollar weakness was seen as another factor that contributed to the pair's strong intraday positive move. The risk-on impulse, along with retreating US Treasury bond yields, dented demand for the safe-haven greenback and extended additional support to the major. That said, rising bets for a 50 bps Fed rate hike at the next two meetings helped limit any deeper losses. Investors seem convinced that the Fed would adopt a more aggressive policy stance to combat stubbornly high inflation. This, in turn, acted as a headwind for the major and led to a late pullback of around 50 pips from the daily high. The pair, however, attracted fresh buying during the Asian session on Wednesday amid the prevalent bullish sentiment around the global equity markets. Market participants now look forward to the release of the prelim German consumer inflation figures for March. This, along with ECB President Christine Lagarde's speech should influence the shared currency and provide some impetus to the EUR/USD pair. Later during the early North American session, traders will take cues from the US macro data - the ADP report on private-sector employment and the final Q4 GDP print. Apart from this, the US bond yields and the broader market risk sentiment, will drive demand for the greenback and allow traders to grab some short-term opportunities. Technical outlook From a technical perspective, the overnight strong move-up stalled near the 1.1135-40 region. The mentioned area nears the 50% Fibonacci level of the recent slump from the vicinity of the 1.1500 mark and should act as a pivotal point for trades. Sustained strength beyond will suggest that the pair has bottomed out in the near term and set the stage for a move towards reclaiming the 1.1200 mark. The momentum could further get extended towards testing the 1.1230 region, or the 61.8% Fibo. level. On the flip side, the 38.2% Fibo. level, around the 1.1070 region, now seems to act as immediate strong support. A convincing break below would make the pair vulnerable to slide back towards testing the key 1.1000 psychological mark with some intermediate support near the 1.1025 area. The next relevant support is pegged near the 23.6% Fibo. level, around the 1.0975-1.0970 area, which if broken decisively would shift the bias back in favour of bearish traders. The pair might then accelerate the slide towards the 1.0900 mark before eventually dropping to the 1.0860 support en-route the YTD low, around the 1.0800 mark touched earlier this month.

Outlook: The consumer is two-thirds of the US economy and if we are going to get a recession, first we have to see a change in consumer behavior. So far we are not seeing that. We are not sure that the Conference Board consumer confidence index today will be a good measure—we’d rather see what they do, not what they say. Whatever the Conference Board delivers, it can’t be as bad as the GfK indicator in Germany (see above). And consumers are buying houses like there is a shortage or something, driving up prices dramatically. In the Jolts report, everyone will be looking for evidence of the labor shortage and more information on that quit rate. Every newsletter and newspaper has the 5/30 yield curve inversion. White Rabbits are scurrying hither and yon, muttering "Oh my fur and whiskers! I'm late, I'm late, I'm late!" It’s the Fed considered late, aka “behind the curve. But we say a yield curve inversion is irrelevant to the recession outlook, or relevant to something else, in a world in which the Fed holds $8.96 trillion of the $28.43 trillion debt outstanding (as of 3/15/22). The yield curve debate is not going to fade away. Bloomberg reports that a Citigroup analyst says Powell is looking at the wrong yield curve (like the one we showed yesterday ending at 2 years). “Based in part on the deeply inverted eurodollar futures curve from June 2023 to June 2024, Citigroup calculates the risk of a U.S. recession in the next twelve months has risen to 20%, up from 9% in February. The dislocation between the spread Powell is focused on and the eurodollar curve is the largest since 1994, when a series of aggressive Fed rate hikes was followed by cuts the following year, according to Citigroup.” Recall that in 1994, there was no recession—and inflation was a whole lot lower.  The analyst fails to note that in addition to low then-current inflation, inflation expectations were low. Besides, in 1994, Clinton was president and Gingrich had yet to shut down the US government. Russia was invading Chechnya. OJ Simpson was arrested and put on trial. Chain bookstores were all the rage (try to find one now). The internet was just catching hold. We had Netscape but not Explorer. There were only 45 billion pages and 4 billion users. Today Googles searches for 35 trillion sites. Not least, total US debt outstanding in 1994 was $4.693 trillion. Today the Fed owns almost double that, or 32% of debt at $28.428 trillion. Should we be making comparisons? No. We might say 1994 was an age of innocence, before quantitative easing and totally toxic politics. Don’t forget that Eurodollars were a Thing, whereas today they are on the way out and will be gone by June 2023 in favor or SOFR. Does that affect the chart? We don’t know, but while we can never say “this time it’s different,” we should also consider the overall environment and context. Today is not the same as 1994 in many ways that might be meaningful. Online trading did not exist. We had real-time cable news but actual live data cost an arm and a leg.  (It still costs an arm and a leg at Bloomberg.) We complained about information overload at the time but it got thousands of times worse. Information counts. A lot. In 1929, a major contributor to panic was lack of information. The tape couldn’t keep up and traders were flying blind as often as not. Today we have nearly instant information and traders whose trading time horizon is 60-240 minutes, not days and weeks. We also have AI trading systems that see a seemingly statistically meaningful drop or rise in a price that gets magnified by traders jumping in any big move. And never mind you have no reason to get in—go back and invent one later. Finally, this year we are coming out of a war—a pandemic can be likened to a war, economically—and in the middle of an authentic war. Wars are expensive, drive up budget deficits, screw up consumption/supply lines/savings, and make some market prices irrational. As if QE had not been enough to distort them in the first place. We continue to think QE alone suffices to make current conditions non-comparable to all previous sets of conditions, including curve inversion. Bottom line, the flat yield curve reflect inflation expectations, not current inflation. The Eurodollar bounce can easily be something aberrant that one guy got started and others are, sheep-like, following. And even if it’s meaningful, a 20% chance of recession is pretty low, so what are we talking about, again?  We are not alone in dissing the inverted yield curve talk. Bloomberg writes it could be a false signal, saying the yield curve is getting...

EUR/USD - 1.0984 Although Monday's initial break of last week's low at 1.0961 to 1.0945 in Europe suggests euro's correction from March's 22-month bottom at 1.0807 has ended, subsequent short-covering rebound to 1.0999 would yield choppy swings before prospect of another fall, loss of momentum should keep price above pivotal sup at 1.0902. \Only a daily close above 1.1000 may shift risk to the upside for risk stronger retracement to 1.1035/45. Data to be released today Japan unemployment rate, Australia retail sales. Germany import prices, Gfk consumer sentiment. Canada average weekly earnings, U.S. redbook, monthly home price, JOLTS jobs openings and consumer confidence on Tuesday.

With the unrest in the Black Sea basin, it appears that there are two more cross-trade wars in the world. These are about energy and currency. Crude oil prices, down most of Friday, finally ended the week higher after a huge fire broke out at oil facilities in Jeddah, Saudi Arabia, following attacks by Yemeni rebels. The great winner of the Russian-Ukrainian conflict is undoubtedly the United States, which now seems to be taking advantage of Europe’s moment of weakness. The latter is indeed currently switching its energy supplies from Russian natural gas (pipeline-transported) to the much more polluting and much more expensive US shale gas. The reasons are much higher extraction (fracking) and transportation costs since it requires additional processes such as liquefaction/degasification and the deployment of more port terminals that are able to provide such steps – also much more energy-consuming – linked to Liquefied Natural Gas (LNG) supplies. By doing so, the European Union is going to increase its dependence on the US whilst a new and stronger block (including Asia) emerges on the east side. As a result, we have already started to witness dedollarisation in international trade, with the petroyuan set to dethrone the heavily-printed petrodollar. No wonder that the US dollar supply surge has ended up triggering uncontrollable and probably still underestimated inflation. As a result, this monetary virus is spreading through the global economy at a faster pace than any other variant! WTI Crude Oil (CLK22) Futures (May contract, daily chart) Henry Hub Natural Gas (NGK22) Futures (May contract, daily chart) Want free follow-ups to the above article and details not available to 99%+ investors? Sign up to our free newsletter today!

AUD/USD Current Price: 0.7489 Inflation and the Eastern European crisis undermined the market’s mood. Australian Retail Sales are foreseen up by 1% in February. AUD/USD has begun correcting lower, although the AUD remains resilient. The AUD/USD pair gapped lower at the weekly opening, closing the gap before resuming its slide. The pair ends the day with modest losses trading in the 0.7490 price zone after bottoming for the day at 0.7466. The Australian dollar remains resilient, as it barely gave up, despite the poor performance of equities and a strengthening greenback. Stocks came under selling pressure amid persistent concerns related to the Russian invasion of Ukraine and its effects on the global economy. Markets talks are hinting at an upcoming round of peace talks in Turkey, although there’s no confirmation yet, neither much room for a diplomatic solution. Russian Foreign Minister Lavrov said that a meeting between the Russian and the Ukrainian presidents would be counter-productive at the time being.   Government bond yields, in the meantime, soared across the world after the Japanese Central Bank jumped to intervene in financial markets for a second time this year, a sign that the current monetary policy is falling short of helping the economy. On the data front, Australia did not publish relevant data on Monday, but it will release February Retail Sales on Monday, seen up 1% after advancing 1.8% in the previous month. AUD/USD short-term technical outlook The daily chart for the AUD/USD pair shows that bulls remain in control, although chances of a bearish correction have increased. The pair keeps developing well above all of its moving averages, with the 20 SMA heading firmly higher above the longer ones. Technical indicators, in the meantime, have partially lost their bullish strength but remain near overbought readings. In the near term, and according to the 4-hour chart, the risk skews to the downside, although declines look corrective and could be short-lived. The pair is now below a flat 20 SMA, while technical indicators hover just above their midlines, with the Momentum heading lower and the RSI flat at around 73. A break below the aforementioned daily low should lead to a test of the 0.7390 level, where bulls should come back to maintain the long-term trend in place. Support levels: 0.7465 0.7430 0.7390 Resistance levels:  0.7520 0.7555 0.7590 View Live Chart for the AUD/USD

EUR/USD continued losing ground through the Asian session on Monday amid sustained USD buying. The Russia-Ukraine crisis, rising bets for a 50-bps Fed rate hike move underpinned the safe-haven buck. A sustained break below the 1.0900 round-figure mark will set the stage for a further depreciating move. The EUR/USD pair extended its recent downfall witnessed over the past one week or so and witnessed some follow-through selling during the Asian session on Monday. Investors remain concerned that the European economy would suffer the most from the spillover effects of the Ukraine crisis. This was reinforced by Friday's release of the dismal German Ifo Business Climate Index, which dropped from 98.5 to 90.8 in March and acted as a headwind for the shared currency. On the other hand, a combination of factors benefitted the US dollar, which further exerted downward pressure on the major. Against the backdrop of the lack of progress in the Russia-Ukraine peace negotiations, hawkish Fed expectations continued lending support to the safe-haven greenback. Investors seem convinced that the Fed would adopt a more aggressive policy to combat high inflation. In fact, the markets have been pricing in a 50 bps rate hike in the May meeting amid worries that surging commodity prices would put upward pressure on the already high consumer prices. This, in turn, pushed the yield on the 10-year US government bond beyond the 2.5% threshold, or a fresh two-year and underpinned the buck. There isn't any major market-moving economic data due for release on Monday, either from the Eurozone or the US, leaving the pair at the mercy of the USD price dynamics. Hence, traders will take cues from developments surrounding the Russia-Ukraine saga, which, along with the US bond yields, should influence the USD. The focus, however, will remain on this week's important US macro data, including the closely-watched monthly jobs data (NFP) on Friday. Nevertheless, the pair remains depressed for the fourth successive day - also marking the sixth day of a negative move in the previous seven - and seems vulnerable to slide further. Technical outlook From a technical perspective, sustained weakness below mid-1.0900s could make the pair vulnerable to accelerate the slide back towards the 1.0900 round-figure mark. Some follow-through selling would expose the YTD low, around the 1.0800 mark, with some intermediate support near the 1.0860-1.0850 region. A convincing break below the former should pave the way for a slide towards the 1.0765 area en-route the 1.0730-1.0725 region. This is followed by the 1.0700 round figure, below which the downward trajectory could get extended towards 2020 low, around the 1.0635 area. On the flip side, the key 1.1000 psychological mark now seems to act as immediate strong resistance. The next relevant hurdle is pegged near Friday's swing high, around the 1.1035-1.1040 region, above which a bout of short-covering should allow bulls to aim back to reclaim the 1.1100 round-figure mark. The recovery momentum could then lift spot prices back towards the 1.1135-1.1145 barrier, which if cleared decisively will suggest that the pair has bottomed out in the near term.