Geopolitics has been a key driver early this week. As pictures of the meeting between Putin and French President Macron emerged yesterday, there is a sense of improvement in relations. This could avert the prospect of military conflict between Russia and the western allies. Although Russia is still insisting that Ukraine must not join NATO (if it does they will be drawn into conflict), there seems to be a path to a peaceful resolution that could “suit everyone” (according to Reuters).

This is allowing a slight improvement in risk appetite during a period where markets are looking for catalysts amidst a subdued economic calendar. Indices are edging positively higher, whilst there is a hint of positive risk bias to moves on major forex.


Risk appetite is mixed to slightly positive: With US futures consolidating and European markets ticking slightly higher, the glass seems to be half full today. However, this is tempered by a mild outperformance of the USD and commodities slipping back. 

Treasury yields tick higher again: After a day of little direction yesterday, bond yields are starting to move higher once more. This is allowing USD to strengthen again. [USD positive] 

Putin meeting with Macron: The Presidents of Russia and France have met and Putin has set a path to avoid conflict. He prefers dialogue, but as long as Ukraine does not join NATO, military intervention can be avoided. It remains to be seen how this will go down with western allies. [Risk uncertain] 

ECB President Lagarde dampens tightening speculation: The ECB President has talked about “policy normalisation” as inflation moderates, instead of “measurable tightening”. This suggests a preference for a less aggressive form of tightening monetary policy [EUR slipping back] 

Crypto rally continues: Bitcoin continues its sharp recovery of recent days. Since bottoming at $32,950 Bitcoin has rallied over +35%. [Bitcoin positive] 

Economic Data:

  • US Trade Balance (at 1330GMT). The deficit is expected to have widened to -$83.0bn in December (from -$80.2bn in November)    


Broad outlook: A hint of positive risk appetite developing.

Forex: EUR and JPY are the main underperformers, with AUD and NZD a shade positive.

  • EUR/USD has pulled back from key resistance at 1.1482 and is unwinding last week’s gains towards the old 1.1360/1.1385 band. The bulls will be looking to build support to sustain the improving outlook. Below 1.1345 begins to look less positive again and maintains the range.
  • GBP/USD has spent the early part of this week in consolidation and building support around 1.3490/1.3500. Yesterday’s small-bodied candle and a similar-looking move today reflect the indecisive trading right now. Key support is 1.3357 with resistance at 1.3627.
  • AUD/USD has again rebounded into test resistance around 0.7120/0.7165. This seems to be a bit of a crossroads moment with the RSI around 50. A break above 0.7180 opens the upside. Support at 0.7050 needs to be a higher low for recovery to build. 

Commodities: Gold and silver are edging higher again. Oil is easing back from multi-year highs.

  • Gold has started to look more decisively positive with a strong positive candle yesterday. The move above $1815 has opened $1828/$1832 again. However, we note the still ranging outlook on momentum and would be cautious of chasing too far. A close below $1800 would be disappointing now.
  • Silver has just tailed off from completing a base pattern, leaving resistance at $23.10. A decisive move above $23.10 would imply recovery towards $24 again. Initial support is at $22.60.


  • Brent Crude oil is once more just easing back from an overbought position. A near term pullback within an 8-week uptrend that currently sits around $90.40. The latest breakout support is at $91.80, with yesterday’s high of $94.55 being resistance.

Indices: A drift lower on Wall Street is looking to form support. European indices look to set up more positively, with a base on the DAX and the FTSE eyeing multi-year highs again.   

  • S&P 500 futures have been drifting lower in recent sessions, but have started to build a basis of support early this week. Consolidation above 4438 has formed and futures are ticking higher now today. The buyers need to push above 4532 to re-engage a recovery outlook. Initial support is at 4462.
  • DAX Buying pressure has built on the support at 15,066 to complete a small base pattern this morning. A move above 15,250 implies around +190 ticks towards 15,440. Initial resistance around resistance 15,300 is now being tested, beyond that is the lower high at 15,550. Initial support at 15,195/15,250.
  • FTSE 100 continues to be the outperformer of 2022. Ticking solidly higher yesterday the market is now testing the 7644 high that dates back to January 2020. Beyond 7644 the next resistance is 7729. Initial support is at 7590.

Support and Resistance levels