FOREX TODAY: EYES ON CENTRAL BANK SPEAKERS, RUSSIA-UKRAINE HEADLINES

14 February 2022, 08:54

Here is what you need to know on Monday, February 14:

Safe-haven flows dominated the financial markets ahead of the weekend amid renewed fears over a Russia-Ukraine military conflict and investors stay cautious early Monday. The economic docket will not be featuring any high-impact data releases and the risk perception is likely to remain the primary driver of financial markets. Additionally, European Central Bank (ECB) President Christine Lagarde and St. Louis Fed president James Bullard will be delivering speeches later in the day.

Late Friday, several news outlets reported that Russia was expected to invade Ukraine as soon as this week. Over the weekend, the White House said that the US will respond "swiftly and decisively" to any further Russian aggression against Ukraine. US President Biden's national security adviser, Jake Sullivan, told CNN that an invasion could take place before February 20.

Japan's Nikkei 225 Index lost more than 2% on Monday and the Shanghai Composite Index is down more than 1%. US stock index futures trade flat in the early European session and the benchmark 10-year US Treasury bond yield, which lost nearly 6% on Friday, is up 2% at 1.95%. The US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is staying relatively quiet near 96.00 after rising 0.5% last week.

Meanwhile, oil prices continue to push higher with the barrel of West Texas Intermediate (WTI) trading at its highest level since September 2014 at $94.20.

EUR/USD fell sharply late Friday and touched its lowest level in more than a week at 1.1329. The pair is moving sideways in a relatively tight range below 1.1350 early Monday.

GBP/USD is posting small losses below 1.3550 heading into the European session. The UK's Office for National Statistics will release the labour market data on Tuesday.

USD/JPY fell nearly 100 pips on Russia-Ukraine headlines but seems to have steadied above 115.00. Recovering US Treasury bond yields are helping the pair limit its losses.

Gold surged to its strongest level since mid-November at $1,865 on Friday. XAU/USD was last seen consolidating its gains around $1,850.

Bitcoin registered small losses over the weekend after facing heavy selling pressure on Friday but it managed to stay afloat above $40,000. Ethereum moves sideways below $3,000 after closing the previous four days in the negative territory.

USD/TRY PRICE ANALYSIS: SELLERS KEEP REINS AROUND $13.50

14 February 2022, 08:57

• USD/TRY prints mild gains after four consecutive days of losses.
• Corrective pullback from 200-SMA fails to cross 50-DMA, steady RSI adds strength to bearish bias.
• Fortnight-old horizontal resistance also challenges pair buyers, monthly support line restrict immediate declines.

USD/TRY fades bounce off 200-SMA while taking rounds to $13.50 heading into Monday’s European session.

In doing so, the Turkish lira (TRY) pair remains below 50-SMA amid steady RSI conditions.

Other than the immediate hurdle around $13.55, comprising the 50-SMA, a two-week-old horizontal resistance area around $13.65 will also challenge the USD/TRY bulls.

Should USD/TRY prices rise past $13.65, the pair’s run-up towards the $14.00 threshold can’t be ignored.

Meanwhile, a one-month-old ascending support line near $13.35 restricts short-term declines of the pair ahead of the horizontal support zone from January 20, close to $13.25.

During the quote’s weakness past $13.25, the $13.00 round figure and January’s low near $12.75 should lure the USD/TRY bears.

USD/TRY: Four-hour chart

USD/JPY RECOVERS TO NEAR 115.50, WITH HORIZONTAL TRENDLINE RESISTANCE BACK IN SIGHT

14 February 2022, 08:05

• USD/JPY bounces to around 115.50 after defending 115.00.
• Russia-Ukraine geopolitical risks continue to remain a threat.
• Downside appears cushioned amid a bunch of healthy support levels.

USD/JPY is consolidating Friday’s sell-off around mid-115.00s, trying to find the conviction to extend the recovery momentum.

Even though the risk sentiment has somewhat recovered, worries over a potential Russia-Ukraine war persist, which keeps any renewed upside in the US Treasury yields limited. This, in turn, could stem USD/JPY’s rebound.

Bulls may also find comfort from an increasing case for rising global rates, as inflation soar worldwide. The January Fed meeting’s minutes are likely to ramp up expectations for aggressive tightening by the world’s most powerful central bank.

Meanwhile, the Bank of Japan (BOJ) successfully defended its key bond yield target on Monday, as attention turns towards the Japanese growth numbers due on Tuesday.

In the meantime, the speech from St. Louis President James Bullard will be closely eyed for fresh hints on the Fed’s rate hike plans.

USD/JPY: Technical outlook

USD/JPY’s daily chart shows that the price found buyers well above the bullish 21-Daily Moving Average (DMA) at 114.79.

Also, bulls remain hopeful as the spot managed to defend the 115.00 level, as the 14-day Relative Strength Index (RSI) continues to hold above the midline.

On the upside, daily closing above 116.00 is needed to retest Friday’s high of 116.17, above which the critical horizontal trendline resistance at 116.34 will come into play.

EUR/USD FACES SOLID SUPPORT AROUND 1.1300 – UOB

14 February 2022, 08:12

FX Strategists at UOB Group noted further downside in EUR/USD should meet decent support in the 1.1300 area in the near term.

Key Quotes

24-hour view: “The sharp drop in EUR during late NY hours to 1.1328 came as a surprise. While the rapid decline appears to be running ahead of itself, EUR could dip 1.1328 from here. That said, the major support at 1.1300 is unlikely to come into the picture. Resistance is at 1.1385 followed by 1.1410.”

Next 1-3 weeks: “Last Friday (11 Feb, spot at 1.1420), we highlighted that the recent upside risk has dissipated and we expected EUR to trade between 1.1340 and 1.1500. We did not anticipate the rapid manner by which EUR dropped below 1.1340 (low of 1.1328). Downward pressure has increased, albeit not by much. There is room for EUR to edge lower but any weakness is likely limited to a test of 1.1300. On the upside, a breach of the ‘strong resistance’ level, currently at 1.1440, would indicate that the downside risk has dissipated.”

GOLD FUTURES: RECOVERY HAS FURTHER LEGS TO GO

14 February 2022, 08:22

Open interest in gold futures markets rose for the fifth consecutive session on Friday, this time by around 16.2K contracts considering flash data from CME Group. Volume followed suit and went up for the second straight session, now by nearly 5K contracts.

Gold now targets $1,877

Friday’s strong upside in the precious metal was amidst rising open interest and volume, leaving the door open to the continuation of the uptrend in the very near term and with the immediate target at the November 2021 high at $1,877 per ounce troy.