WTI and Brent crude oil slid more than 8% on concerns over weaker Chinese demand due to the pandemic lockdown

29 March 2022, 03:11

Market Focus

The US equity markets rallied on Monday as the markets eyed another negotiation between Russia and Ukraine while investors shook off recession concerns. The Dow Jones Industrial Average added 0.27% and the S&P 500 climbed 0.71%; the Nasdaq Composite extended 1.31%, led by Tesla Inc. Notably, global equity markets have been up nearly 8% from the lows reached since the invasion of Ukraine. The markets seem to be trying to parse the war, elevated commodity prices and a hawkish Fed.

Shares of Tesla Inc. surged more than 5% following the news that it was seeking approval to increase its shares to enable a stock split in the form of a dividend. A stock split plan came after Tesla decided to suspend its manufacturing factory in Shanghai due to the pandemic lockdown.

Despite most Western countries attempting to impose sanctions against Russia, the UAE energy administration has insisted that Russia will always be part of the OPEC+ as Russia’s energy output is impossible to replace, essentially playing a vital role in the energy market. In the meantime, the UAE also said that Russia should be included in energy talks.

Main Pairs Movement:

Gold declined nearly 1.8%, to $1,922.8. as a rising dollar sapped demand for the safe-haven asset.  The demand came after the Wall Street banks increased their expectations of a more aggressive Fed. Citigroup Inc. now sees four straight half-point moves in response to the inflationary pressure. In the meantime, gold’s bulls ceased on Monday amid developments between Russia and Ukraine, where Russia is no longer demanding the “denazification” and “demilitarization” of the latter.

WTI and Brent crude oil slid more than 8% on concerns over weaker Chinese demand due to the pandemic lockdown. WTI was down 8.23% while Brent oil dropped 8.19% at the end of the day.

The Japanese Yen continues to plunge as the Bank of Japan continues with its easy monetary policy. In the meantime, according to BOJ’s Governor Haruhiko Kuroda, a weaker Yen is fine for him. USDJPY was up 1.42%, hitting the highest since 2015.

Technical Analysis:

GBPUSD (4-Hour Chart)

Cable experienced a sharp drop after falling three days straight during the past week. Revived Dollar strength has pushed the pair below our previously estimated support level of 1.3131. The FOMC’s firm hawkish stance and rising U.S. 10-year Treasury yield have boosted the Dollar. Furthermore, Britain’s most recent retail sales figures dropped surprisingly for February, indicating the impact of the BoE’s rate hikes and the possible externality effects of rising energy prices. On the economic docket, the U.S. is due to announce its March consumer confidence figures and JLOTS job openings for February, later today.

On the technical side, Cable could not hold our previously estimated support level at 1.3131 and is heading towards the next level of support at 1.3018. RSI for the pair sits at 43.4, as of writing. On the four hour chart, Cable is trading below its 50, 100, and 200-day SMAs.

Resistance:  1.3282

Support: 1.3131, 1.3018

EURUSD (4-Hour Chart)

The EURUSD pair traded lower to start the new trading week. With no new developments coming from the Ukraine-Russia war, market participants seem to slightly favour the Dollar over the Euro due to rising U.S. Treasury yields and interest rate differentials. Market participants should note that, according to the previous ECB statement, the PEPP (Pandemic Emergency Purchasing Program) is due to end by the end of March.

On the technical side, EURUSD is consolidating around our previously estimated support level of around the 1.0985 price region. RSI for EURUSD sits at 43.05 as of writing. On the four hour chart, EURUSD is trading below its 50, 100, and 200-day SMA.

Resistance: 1.1127

Support: 1.0985, 1.0845

XAUUSD (4-Hour Chart)

With demand for the Dollar rising, XAUUSD dropped slightly to start the new trading week. Despite the stalemate between Russia and Ukraine, market participants seem to have rotated out of the precious metal to seek higher returns amid rising global interest rates. Purchasing and selling volume for XAUUSD has steadily declined as the Russia-Ukraine war heads into its second month. However, any aggression by either party could send gold pricing flying once again.

On the technical side, XAUUSD has traded mostly sideways on the four-hour chart. After a sharp sell-off during the Asia and Europe trading sessions, gold has found some support just above $1935 per ounce. RSI for the pair sits at 46.1 as of writing. On the four hour chart, XAUUSD is trading below its 50 and 100-day SMAs but above its 200 day SMA.

Resistance: 1947, 1961

Support: 1918