London 4/3/2022
The Non-Farm Payrolls (NFPs) which measure the new job positions in the US were announced earlier today.  The US added 678K new jobs in February which is significantly higher than the markets’ expectations of 400K. The point is that this important news did not influence the markets and more specifically the currency markets as the war in Ukraine has dominated the current affairs. The Russian invasion is carrying on, the threats for the usage of nuclear weapons are repeated and the sanctions in Russia continue. All these create a negative sentiment amongst the investors and a risk-off mood that pushes them to less risky investing solutions.
The US dollar is very strong and the USD Index has climbed to 98.75 which is the highest price since the May of 2020. The euro is free-falling, so does the sterling and only the Japanese currency is relatively strong due to its safe-haven asset characteristics. The bond yields are also dropping. The US 10-year bond yield started the week at 1.97% and it is currently moving below 1.74%.
EURUSD (current price 1.0904) is very bearish this week. It opened with a bearish gap on Monday and in total is almost 400 pips lower than last week’s closing price. The war in Ukraine does now show any clues of relief and earlier today the Russian forces seized a Ukrainian nuclear plant. Moreover, during this month the markets expect an interest rates hike by the Fed but the same action does not seem very likely in Eurozone so the USD has one more reason to be strong. Most of the analysts believe that by the end of 2022, the interest rates in the US will be above 2%.  The PMIs in Eurozone was announced below expectations but the unemployment rate fell at 6.8% in January but nobody cares because there are pre-war situations. The EURUSD has broken out a series of supports and the next ones are at 1.0870 and 1.0780. The most important and strong support though is at 1.0635.
GBPUSD (current price 1.3215) is very bearish this week, almost 200 pips lower than the last week’s close. The US dollar has many reasons to be very strong: it is a risk-off investment solution and it is favored during a crisis and the US macros are positive (see NFPs results). Besides the PMIs that were announced in the UK, there were no other important scheduled announcements so the war in Ukraine is the major factor for the pair’s movements. The GBPUSD is very close to the major support at the 1.3165 price area but below that level, the road to 1.30 is open. Only some good news regarding the war may reverse the strong downtrend.
USDJPY (current price 115.17) is slightly bearish this week, just 50 pips below the last week’s closing price. The US dollar is very strong but two main reasons do not allow the pair to develop an uptrend. The first reason is the bond yields that fell very much this week. The second one has to do with the Japanese currency which is traditionally a good option during global fears and concerns so it is strong too. The unemployment rate in Japan was in January at 2.8%, a bit higher than December’s rate but in such an uncertain environment it does not make too much sense. As long as the USDJPY stays above 115, the pair’s buyers hope that it can reach the important price resistance at 116.35.
DISCLAIMER: The information produced by a-Quant is of a general nature only. It is not personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

Leave a comment