General Comment

For another week the war in Ukraine continued with undiminished intensity, bombings, and dead civilians but also fears of great economic consequences in most countries of the world. The Ukrainian issue has exacerbated the pre-existing energy crisis and rekindled the major inflation problem that has plagued economies for several months. During the week, some signs of easing tensions in Ukraine appeared with the meeting of the Foreign Ministers of Russia and Ukraine in Turkey and with an upcoming meeting between Zelensky and Putin, which has some reasonable chances to take place. But the issue seems to be getting complicated again after US media announced that Russia had requested China’s military assistance, with US National Security Adviser Jake Sullivan saying that such a move would lead to sanctions with absolute certainty.

Last Thursday we had two important announcements. The European Central Bank meeting on interest rates and monetary policy where there was no increase in interest rates as expected but there was a development which was considered by many as a harbinger of an increase in interest rates. More specifically, the Asset Purchase Program (APP), which was to expire at the end of the year, will eventually expire in the third quarter. The other big announcement had to do with inflation in the United States which was announced for February at 7.9%, a significantly higher price compared to 7.5% of the previous month. A few weeks ago, the markets expected Fed to hike interest rates by 0.50%. With the start of the war in Ukraine, many analysts thought that an increase in interest rates of 0.25% is more realistic, but high inflation may restore the scenarios for 0.50%.

European stock markets strengthened in the hope of finding a solution in Ukraine, while the corresponding US markets performed a correction. We also saw last week, low profits for gold and correction of oil prices after the big rise. Bitcoin and most cryptocurrencies had stabilizing trends while it is noteworthy to say that bond yields increased significantly with the US 10-year closing near 2% last week.

This week, in addition to the developments in Ukraine that will dominate the international markets, contains the Fed meeting next Wednesday on US interest rates and monetary policy, as we saw above. The Bank of England and the Bank of Japan have similar meetings on their interest rates and monetary policy. Also important are the announcements of retail sales in the United States and inflation in Canada. Finally, the meeting of Ecofin is expected with interest on Wednesday.



The US SP500 index closed lower last week, at 4,205 points and losses of 2.60%. On Wednesday and Friday, there were attempts at recovery due to some expectations for a solution to the Ukrainian problem, but the denial of hopes, for the time being, keeps the index stuck in a downtrend. Helping in this situation is the perception of the markets for a big increase in interest rates next Wednesday, something that generally does not favor stock markets. The rising in bond yields, which are often negatively correlated with the index, also had a role. Two key factors will affect the SP500 this week: developments in the war in Ukraine and the Fed’s interest rate policy, which will be expressed with a possible hike on Wednesday. Below the 4,100 points, we have a strong downtrend while the recovery is visible above the 4,335 points which is the high price of the previous week. We may try long positions this week.



The German index DAX40 moved higher last week, closing at 13,552 points, with profits exceeding 3.30%. Hopes of easing the crisis in Ukraine’s war have helped the index recover, as the DAX40, like most European indices, has suffered more losses than the US ones since the start of the war. Germany had positive results such as increased retail sales, factory orders, and industrial production in January and stable inflation in February at 5.5% but all this is now secondary as the developments in the war and the economic consequences (mainly in energy) that they can create are in the first place. A continuation of the upward reaction above 14,100 points will give hope for a further rise but below 13,000 points the correction will probably earn more points and by trusting this case more, we may try long positions this week.



The British FTSE100 index moved higher last week, closing at 7,111 points with profits above 2.20%. Hopes for a solution to the Ukraine war that prevailed from Tuesday onwards, helped the index recovery, as the sharp drop had led it to the 6,700-point range. The close above the 7,000 points – a milestone, is a positive development and if it is accompanied by a bullish break out of 7,254 points which is the high price of the last week, then the chances of recovery will be strengthened. Below 7,000 points there will be a problem of possible further correction for substantive and psychological reasons. The current week is important for the UK as per the financial announcements: the announcement of interest rates by the Bank of England and the unemployment rate will increase volatility and will be decisive factors. Long positions is our selection for the current week.



Last week was bullish for gold, with a closing price at $ 1,991.7 and profits approaching 1%. It is worth noting that the gold in the middle of the week “threatened” the all-time high of $ 2,089, reaching at $ 2,078, but from these levels, there was a sharp de-escalation that continued after the announcement of high inflation in the US after expectations revived to increase interest rates by 0.50%, at the Fed meeting next Wednesday. Yields on bonds that are usually competitive with gold have also risen significantly and this has pushed prices even lower. This week, three major central banks are announcing interest rates: the Fed in the US, the Bank of England, and the Bank of Japan. The last one is not expected to raise interest rates but the chances of the first two doing so are very high. Below the support of $ 1,976 and especially below last week’s low of $ 1,961, the correction seems to be expanding while any consolidated reaction above $ 2,000 gives points to the uptrend. We prefer short positions this week.


US Oil

Last week was corrective for oil with futures for next month closing at $ 109.16, performing losses of more than 5%. In the middle of the week, we saw prices that exceeded $ 130 but on the one hand, some positive expectations for the war in Ukraine and on the other hand, the strongly overbought levels, led to a big correction. The US announcement that oil imports from Russia are banned was news that continued the uptrend, but the approaches of Venezuela and Iran, as efforts to boost production, had a calming effect on prices. Given that OPEC does not seem to be intervening at the moment, any new developments that will raise expectations for a peaceful solution will de-escalate prices while negative news from the field of negotiations will raise prices. Below $ 103.50 and definitely below $ 100, the correction seems to prevail while a return to the uptrend will probably be above the resistance at $ 116.50. We may try low-risk short positions this week.


EURUSD (Euro vs US Dollar)
The EURUSD was slightly bearish last week, opening at 1.0924 and closing at 1.0911. The pair had two faces during the week: upward, especially on Wednesday after the announcement of the European Central Bank for the end of the bond market program in the third quarter of 2022 instead of the end of the year and declining from Thursday and after on the one hand denied expectations for a solution to the Ukrainian issue and on the other hand, the high price of inflation in the US creates the need for a higher interest rate increase in Wednesday’s meeting. The results in Europe were not negative: Germany announced increased retail sales and industrial production while GDP in the eurozone was also positive. However, all this refers to the pre-war period in Ukraine and thus is almost ignored by the markets. The situation in Ukraine determines the risk appetite of investors and thus affects the pair. A possible solution will help the euro and the EURUSD will probably move upwards but as long as the situation continues as it is, the dollar as a safer investment option strengthens, pushing the pair lower. On Wednesday, the Fed’s crucial meeting on US interest rates and monetary policy will play a key role in the EURUSD. Interest rates are expected to increase by 0.25% or by 0.50%. We may try buy positions this week.


GBPUSD (Great Britain Pound – US Dollar)

The previous week was strongly bearish for the GBPUSD, which opened at 1.3219 and closed at 1.3036. It was the bearish third week in a row for the pair which has lost a total of about 550 pips. The risk aversion of most investors creates buyers in the US dollar which is considered a low-risk option and so the pair is significantly pressed. The United Kingdom had a series of positive announcements last Friday. Industrial production, GDP, and manufacturing exceeded market expectations, but this fact was almost ignored as it concerns a period before the start of the war in Ukraine. This week we may see interest rates rise from both central banks (Fed and Bank of England) and this may create very high volatility. If the dollar continues to strengthen, there is a very significant barrier to further downward movement in the 1.30, while if a rise in interest rates in the UK helps sterling, it needs a clear uptrend above 1.32 to get the GBPUSD out of the strong downward channel. Trusting that 1.30 is an oversold situation, we may try buy positions this week.


USDJPY (US DollarJapanese Yen)

The USDJPY, which opened at 116.12 and closed at 117.28, moved strongly upwards last week. The pair managed to break out the resistance at 116.35 which was a high price for many years. The strong dollar helped a lot in this movement as well as the big rise in bond yields. The Japanese currency is also extremely weak as some hopes of easing the crisis in Ukraine drive investors away from safe-haven assets. The Bank of Japan is also holding a meeting on interest rates and monetary policy this week, without expecting interest rates to rise as the country’s low inflation rates allow for loose monetary policy and low interest rates. In contrast to this situation in Japan, the Fed in the United States is expected to raise interest rates next Wednesday, and this perception has created buyers of the USDJPY. If these expectations are met, we may see a further uptrend with the next resistance being in the price range of 118.65, before of course the milestone price at 120. We may try buy positions this week.


EURJPY (EuroJapanese Yen)
Last week was very bullish for the EURJPY, which opened at 125.56 and closed at 128.01. It was an upward reaction that raised the pair well above the low of about 16 months and the price range of 124.40 which it had reached the beginning of the week. Lagarde’s announcement of the end of the bond-buying program from ECB has created a sense of rising interest rates over the year, strengthening the euro. The possible continuation of the loose monetary policy and negative interest rates by the Bank of Japan weakens the yen. If the pair manages to approach or even exceed 130, then the big correction of the last weeks will probably be a thing of the past so buy positions is our selection for the current week.


EURGBP (Euro – Great Britain Pound)

Last week was bullish for the EURGBP which opened at 0.8258 and closed at 0.8368. The euro strengthened significantly based on expectations for an increase in interest rates in 2022 from ECB and sterling seems weak, even if the Bank of England raises interest rates for the third time during the last months. If this sentiment in the markets continues, it is possible to see prices even close to 0.85 but the long-term downtrend has not changed and so a possible continuation of it cannot be ruled out. We may try buy positions this week.


USDCAD (US Dollar – Canadian Dollar)

Last week was slightly bullish for the USDCAD, which opened at 1.2720 and closed at 1.2748. The strengthening of the US dollar and the de-escalation of oil prices were able to offset the recent rise in interest rates by the Bank of Canada and the country’s very good macroeconomic picture: the unemployment rate fell from 6.5% in February to 5.5% and the net change in employment was +336K jobs. From the end of January onwards, there is no clear trend in USDCAD, with the price fluctuating around 1.27 – 1.28. Much will depend on oil prices, which are Canada’s main export, but also on the Fed’s interest rate policy on Wednesday. Below 1.2590 the correction scenario is favored while the approach scenario of 1.30 is favored above 1.28. We may try buy positions this week.


USDCHF (US DollarSwiss Franc)
The USDCHF had a strong uptrend last week, as the opening price was at 0.9165 and the closing price at 0.9347. The strong dollar that dominated the markets, left its mark on the USDCHF as well, especially after the removal of a portion of investors from the safest investment shelters, such as the Swiss currency. Switzerland had positive economic news, with the unemployment rate falling to 2.2%. The pair is close to the resistance of 0.9370 (a high price of about 11 months) and needs new fuel to overcome it. In the case of a corrective reaction, we could see a return to 0.9250 and by trusting this case, we may try sell positions this week.


AUDUSD (Australian Dollar – US Dollar)

Last week was bearish for the AUDUSD which opened at 0.7370 and closed at 0.7291. It was the first corrective week after five consecutive weeks of uptrend, as the strength of the US dollar was able to prevail. The perception of the markets for a significant increase in interest rates by the Fed has given credits to the US currency, even if the Australian dollar is strong, due to the strong recovery of Australia after the pandemic. The Bank of Australia minutes will be announced next Tuesday so we will learn more about its intentions for interest rates and monetary policy, while the announcement of the unemployment rate next Thursday is also important. The main events are of course the war in Ukraine (investment risk aversion sentiment does not favor the Australian dollar) and the announcement of interest rates by the Fed on Wednesday. Above 0.7440, however, the uptrend could be further strengthened so we may try buy positions this week.



Last week was slightly bearish for Bitcoin, which closed at $ 37,790 and losses close to 1.70%. Any attempts for the $ 40,000 did not succeed, so Bitcoin for the fourth week is hovering around $ 38,000, with relatively low volatility. President Biden last Wednesday ordered the government agencies to work together to develop a regulatory framework for cryptocurrencies, and this development has been interpreted positively, pushing Bitcoin above $ 42,500. This of course did not last because the negative investment sentiment of risk aversion prevailed in the markets. In addition, the G7 announced that they will ensure that Russia will not be able to circumvent sanctions through cryptocurrencies and the situation has been further aggravated. In pre-election South Korea, candidates have appointed cryptocurrencies to a dominant issue to garner votes, but Bitcoin shows no signs of recovery. Below $ 37,000, the correction is likely to accelerate so short positions is our selection for the current week.



The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.

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