At the early stages of the European session, there seems to be a degree of respite from the recent selling intent. However, with the oil price once more soaring to multi-year highs (now above $110 on Brent Crude) there is little suggestion that this relief rebound will last long. Newsflow surrounding the Russian invasion of Ukraine will continue to dominate. The response of the West will be ever more stringent and Russian progress in Ukraine and how the war develops will e key

The recent trends of forex trading continue, with EUR and GBP underperforming major currencies, whilst AUD and NZD hold up relatively well. Indices are also running along with familiar themes, with the German DAX and French CAC underperforming once more.

For data traders, there is a lot to watch for today. EUR will be reactive to any surprises in the Eurozone inflation. ADP may be less important given the wild steer it gave for Nonfarm Payrolls last month. The Bank of Canada is expected to hike with a focus on how hawkish the forward guidance is. Jerome Powell’s testimony is the main event though as markets will want to know if the war in Ukraine will impact Fed policy.


Sentiment finds a degree of respite: Sentiment was still with a negative bias overnight but as the European session has kicked in there has been a degree of relief rally forming on risk assets. With a lack of driving factor through the newsflow, it is unlikely that this move will signal a decisive shift in market sentiment. 

Treasury yields are ticking higher: Afte the US 10yr yield fell by -11bps yesterday, a degree of settling down today, with a move +2bps. [Helps to settle markets] 

Russia n progress held up, for now: Ukrainian resistance continues to slow the Russian advance, but fighting continues.

President Biden’s State of the Union address bolsters support of Western allies: Although there was nothing groundbreaking, Biden announced Russian flights were banned from US airspace and will continue with sanctions. 

US releases 30m barrels of oil from SPR: In an attempt to alleviate the oil supply disruptions, the US has released 30m barrels of oil from its strategic reserves. 

Australian GDP marginally ahead of forecast: Australian Real GDP for Q4 was +3.4% (versus 3.0% expected) [AUD supportive]

Cryptocurrency supported again: Bitcoin has jumped strongly in recent days and is now beginning to consolidate around $44,000. 

Fed chair Powell testifies today: Powell’s Congressional testimony to the House Financial Services Committee is at 1500GMT. The questions can create volatility in markets. The big question will be whether Fed tightening might be restricted by the war in Ukraine. [Risk uncertain]

Economic Data:

  • Eurozone flash inflation (at 1000GMT) Consensus is looking for headline inflation to increase to +5.4% in February (from 5.1% in January), with core inflation rising to 2.5% (from 2.3%).
  • US ADP employment change (at 1315GMT) Analysts are looking for 388,000 (after the decline of -301,000 last month)
  • Bank of Canada monetary policy decision (at 1500GMT) The consensus is looking for a hike of +25 basis points to +0.50% (from +0.25% previously).
  • Fed Beige Book (at 1900GMT) This is a more detailed assessment of the US economy by the Federal Reserve.


Broad outlook: Sentiment is relatively stable coming into the European session. 

Forex: EUR and GBP remain the underperformers. AUD and NZD are slightly outperforming.

  • EUR/USD has fallen below 1.1108/1.1120 support to its lowest level since May 2020. Momentum is not stretched and further downside is likely. Rallies are a chance to sell. Initial resistance is at 1.1140/1.1190.
  • GBP/USD has closed under 1.3357 (old Jan low) to suggest continued deterioration towards 1.3160/1.3170 key December lows. Rallies are struggling for any traction and look to be a selling opportunity. Resistance is strengthening at 1.3440. 
  • AUD/USD is holding up well but as yet is unable to overcome the resistance of the key resistance band 0.7270/0.7315. This marks the highs of a three-month trading range and the potential for another reversal is growing. A decisive move under 0.7220/0.7235 opens the potential for a retreat towards 0.7100.

Commodities: Precious metals are just easing back after yesterday's sharp gains. Oil remains strong.

  • Gold has run higher again to close at levels not seen since December 2020. Corrective moves within the four-week uptrend support around $1900 are a chance to buy, with support at $1877/$1886 still key. A slight pullback from $1950 this morning leaves this as initial resistance.
  • Silver is easing back slightly after yesterday’s spike to $25.53. With the strength of the 4-week uptrend, near-term unwinding moves are still a chance to buy for continued testing of the medium-term trading range resistance.
  • Brent Crude oil has accelerated through all reasonable resistance to hit $115 this morning. A slight easing back has taken hold in the past hour or so, but given the strong momentum and lack of resistance, the path to the upside is still preferred. At some stage, there is likely to be a huge spike back lower (momentum is hugely stretched now) with the volatility of the market, but for now, the move is still higher.

Brent Crude Oil

Indices: Some signs of near-term support but negative pressure is still the general bias.  

  • S&P 500 futures have pulled back from 4399 as the potential for a recovery base pattern has been held back. The downtrend of the past two months is up at 4480 and given the negative configuration on momentum, there is no sustainable sign of recovery yet. Initial support of near-term lows between 4227/4275 holding would help to stabilize sentiment.
  • DAX continues to be a significant underperformer of major indices. A move below 13,767 again opens the downside with the market at a one-year low. Resistance is mounting between 13,900/13,980. The next significant support is at 13,300.
  • FTSE 100 fell yesterday but is attempting to reclaim those losses this morning. Resistance around 7400/7440 needs to be overcome for the bulls to begin to look in a better position. Initial support at 7268 is protecting a retest of 7170.

Support and Resistance levels