What are we looking at today:

  • US dollar strengthening: As Treasury yields continue to climb, the US dollar is outperforming and commodities are under selling pressure. Despite this though we are also seeing equity markets climbing.
  • Oil price lower: With a few signs of progress in the Iranian nuclear talks, oil has fallen this morning. 
  • Russia/Ukraine peace talks: more talks are scheduled between 28th and 30th March. Markets will be hoping for progress.
  • Data trading: Into the US session, the US Goods Tarde Balance is the data of note. A lower than forecast deficit would sustain USD positive momentum.  


European traders come back to their desks with heads feeling slightly groggy, having lost an hour from the week’s daylight savings time shift. The early strengthening of the US dollar and further moves higher on Treasury yields may be a sharp wake up call though on Monday morning. This is a week packed with tier one data, whilst the trading focus remains on the Ukraine war and the prospect of progress in the peace negotiations. The first half of the week sees the next round of talks and it seems, at least from the Ukrainian side, some realistic terms are being laid out that could open the door to serious traction. It remains to be seen how genuine the intentions of the Russians are.

Major markets are seeing higher Treasury yields, but with a continuous curve “bear flattening” as yield spreads continue to narrow. This is allowing USD to strengthen across major forex. There is also a decline in commodities being seen. However, it will also be interesting to see whether the pick-up in equity markets early today will be able to continue whilst yields are driving ever higher. 

The economic calendar is relatively light to start the week. The US Goods Trade Balance is early in the US session and is expected to see the deficit increase slightly in February.  

Today's news

Sentiment remains positive despite USD and yields moving higher: The USD has started the week with broad gains across major forex. This is coming as Treasury yields have moved higher again. For now, equity markets are ticking higher, but higher yields are a warning.   

Treasury yields higher, “bear flattening”: Yields have moved higher again, with the 10-year yield now at 2.50%. However, with shorter-dated yields rising more aggressively (2-year yield is at 2.40% today) there is a “bear flattening” yield curve. The spread is now just +10 basis points as the curve moves ever closer to inverting.

Russia/Ukraine peace talks: Peace negotiations are scheduled for 28th to 30th March and there will be hope for traction.   

Oil price lower on progress in Iran nuclear talks: According to Iran there is agreement from certain parties over the text, whilst the US is looking closer to addressing remaining issues. According to an EU official, an agreement is very close. Oil is c. -4% lower today. 

Cryptocurrency strongly higher: Bitcoin gained strength over the weekend and has run higher this morning to new 2022 highs. Breaking above key resistance around $45,800 has completed a three-month base pattern.  

Economic Data:

  • US Goods Trade Balance (at 1330GMT) – The deficit is expected to widen to -$107.6bn in February (from $106.2bn in January)

Major market outlook

Broad outlook: there is a positive sentiment with equities higher. However, the stronger US dollar and higher bond yields are the key factors. This is weighing on commodities.

Forex: USD is regaining upside momentum again, with the JPY especially suffering.

  • EUR/USD has now broken the near-term support at 1.0960 as the market continues to run down the 8-week downtrend. A close below 1.0960 would open the next support at 1.0900, with a test of the 1.0805 key low back in play. Resistance at 1.1045 is increasingly important near term.


  • GBP/USD has lost the support at 1.3155 and is now moving to test the key near-term support band 1.3085/1.3120. Momentum is increasingly corrective. Initial resistance at 1.3225 is a lower high below the key resistance at 1.3298.
  • AUD/USD is higher again today and is performing well amidst the strengthening of the USD again. However, there is a sense looking at the 4-hour chart that the move is losing momentum just under the 0.7555 key resistance. A move below 0.7466 would suggest a correction is forming.

Commodities: Precious metals are unwinding last week’s gains. Oil is also slipping again.

  • Gold looked strong last week on a breakout above $1950, but the move is reversing now from $1966 resistance and pulling sharply lower today. This is again neutralizing the near-term outlook. Below $1910 support would tun the market increasingly corrective near term, with support at $1895 key.
  • Silver has fallen sharply back from $25.85 and has unwound back into the old ranging levels of early last week. The focus will be on support forming, so the support between $24.45/$24.56 will be watched now. 
  • Brent Crude oil remains volatile and the fact that the price has been -4% this morning without turning the market corrective reflects this. For now, on a technical basis, this is a consolidation between $113.40/$124.40. There is a lower high now at $121.70 as the market has unwound this morning. 

Indices: European indices have started well on Monday, with US futures more circumspect.

  • S&P 500 futures gained on Friday but are slightly back this morning. This is the market just shying away slightly from the test of the key February resistance at 4585. How the market reacts to this level will be a key gauge in the coming days. The 4-hour chart shows decent positive momentum still, but slightly less strong than early last week. Support at 4444 is an initial gauge.
  • DAX remains supported above the 14,100 breakout but continues to consolidate between 14,100/14,585. An early tick higher today is encouraging, but until these levels are broken, it would be a neutral outlook under the 12-week downtrend and key resistance around 14,800.
  • FTSE 100 has continued to be choppy in recent sessions amidst a consolidation just under the late February resistance of 7559. Thre is a mild positive bias to momentum within this consolidation. Support at 7405 needs to hold.

Support and Resistance levels

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