In response to the Ruble tumbling and major sanctions from several countries, the Central Bank of Russia has decided to hike its interest rate from 9.5% to 20%

1 March 2022, 02:57

Market Focus

Major indices declined on Monday following the weekend’s nuclear deterrent comment from Putin. However, the equities market began splitting as the negotiation between Russia and Ukraine commenced. The Dow Jones Industrial Average declined 0.49% while the Nasdaq Composite closed higher at 0.41%; the S&P 500 closed slightly below the previous trading session, dropping 0.24% on Monday.

Currency markets were also a major area of volatility on Monday. In response to the Ruble tumbling almost 22% against the US dollar and major sanctions from several countries, the Central Bank of Russia has decided to hike its interest rate to more than double, from 9.5% to 20%.

The US, Canada and Europe have joined forces to remove Russian banks from SWIFT, while Switzerland addressed that it will freeze Russian assets, setting aside a tradition of neutrality. Data from the Swiss national bank has shown that Moscow had more than 11 billion worth of assets in 2020.

Main Pairs Movement

GBPUSD seesawed around 1.3410 heading into the Asian session on Tuesday. The British Pound bounced back on Monday as markets monitored the developments between Russia and Ukraine, resulting in a downside move in the safe-haven currency, the US dollar.

Gold was once boosted by more than $30 on Monday, but it cooled back down to $1,906 in the US session as the market mod has improved following the negotiations between Russia and Ukraine. The first round of the negotiation looked peaceful, which pared the safe-haven demand.

West Texas Intermediate surged 7% towards the $100 mark on Putin’s nuclear threats and Russia’s SWIFT ban. WTI price jumped as Russia is going to face disruptions and obstacles to its oil export without the SWIFT system. In the meantime, OPEC+ has revised its market surplus estimate lower for 2022.

Technical Analysis

GBPUSD (4-Hour Chart)

Cable ended the day trading 0.4% higher than the previous day’s close. Market participants continue to favour the greenback as tensions between Ukraine and Russia are yet to resolve. Today’s Sterling gain is mostly attributed to decreasing U.S. treasury yields—the 10-year Treasury yield is currently at 1.86%. With geopolitical conflicts yet to be resolved, the pound could continue to be dominated by the greenback.

On the technical side, Cable has found firm support around the 1.3311 price region. The near-term resistance level at 1.3435 has been challenged but the pair is unable to break through that level yet. RSI for the pair sits at 47.1758. As of writing, Cable is trading below its 50, 100, and 200-day SMAs.

Resistance: 1.3435, 1.3522

Support: 1.3311

EURUSD (4-Hour Chart)

The euro-dollar pair saw a sharp drop at market opening, but the pair was able to regain some ground as market sentiment for the Euro improved. News of peace talks between Ukraine and Russia buoyed the Euro. However, the Dollar remains dominant as the safe-haven asset. Lowering U.S. treasury yields also benefited the euro.

On the technical side, the Euro-Dollar pair is facing a key resistance at around the 1.12251 price region, but the pair would see another key resistance level around 1.12793. RSI for the pair sits at 46.67 as of writing. EURUSD is currently trading below its 50, 100, and 200-day SMAs.

Resistance: 1.1224, 1.12793

Support: 1.11629

XAUUSD (4-Hour Chart)

Gold prices continue to be highly correlated to the events between Ukraine and Russia. Unfortunately, peace talks held today did not yield a solid resolution to the conflict. furthermore, Russian president Putin’s unpredictable moves have sent gold prices higher. XAUUSD ended the day 1.07% higher than the previous day’s close.

On the technical side, the resistance at 1909.16 is still firm, but gold prices can easily break through this level as market participants continue to use gold as a hedge for risk. RSI for XAUUSD is at 66.5, indicating some overbuying. Gold is currently trading above its 50, 100, and 200-day SMAs.

Resistance: 1909.16, 1953.407

Support: 1900, 1889