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Oil prices jumped more than 5% as the disruption of the Caspian pipeline added to oil supply fears

Market Focus

The US equities market fell on Wednesday as crude oil and gold prices surged amid renewed inflation fears. The Dow Jones Industrial Average slid 1.3%, the S&P 500 declined 1.2%, and the Nasdaq Composite dropped 1.3%. In the meantime, the market looks to be unstable as the war in Ukraine has entered a stalemate. Ukrainian President Volodymyr Zelenskyy continues to call for other countries to put more pressure on Russia.

The benchmark 10-year bond yield fell 2.3% after surging to unseen highs since 2019. Bond yields dropped as the Fed called for a tighter action on its monetary policy in response to the high inflation environment. Investors have fled from the bonds market and held up stocks as an inflation hedge.

The delisting of Chinese stocks in the US might come in the next two years as the geopolitical relationship between the US and China does not seem to want to compromise. At the same time, dual-listed Chinese stocks came into the spotlight after the SEC warned that five Chinese companies were at risk of delisting as they failed to comply with the Accountable Act.

Main Pairs Movement

Gold was up 1.23% to $1,944 following the risk-off mood amid the news that Russia plans to make “unfriendly” countries buy its natural gas with rubles. Gold attracted some buyers as the market sentiment remained fragile amid the lack of peace talks in between Russia and Ukraine.

Crude oil prices continued to attack the three-week-old resistance below $115. Oil prices jumped more than 5% as the disruption of the Caspian pipeline added to oil supply fears. The Caspian pipeline is an important line for the global markets, carrying over 1.2 million barrels per day of Kazakhstan’s main crude supply, which accounts for 1.2% of the entire world’s demand.

USDJPY went further north and was trading at 121.147 on Wednesday. The Japanese yen continued to depreciate as the Bank of Japan remains its ultra-loose policy. On the contrary, the US Fed begins to adopt a more aggressive policy.

Technical Analysis

GBPUSD (4-Hour Chart)

Cable went on an impressive rally over the previous trading day, the pair gained 0.73% at yesterday’s close. However, momentum has faded for Cable, which has given up more than half of yesterday’s gain as of writing. The benchmark U.S. 10-year Treasury yield has reached historical heights over the past couple of days, helping the Greenback gain back some strength despite recent weakness. Market participants will now shift their focus to tomorrow’s U.K. PMI data and the U.S.’s initial jobless claims figures.

On the technical side, Cable reached a new resistance level at 1.3282 and retraced back to 1.3131 to form a new support level around that price region. RSI for Cable was last seen at 45.65. On the four hour chart, Cable is currently trading below its 50, 100, and 200-day SMAs.

Resistance:  1.3282

Support: 1.3131, 1.3018

EURUSD (4-Hour Chart)

EURUSD traded sideways throughout yesterday. With no significant economic data released by the European Union, the EURUSD pair continues to be heavily influenced by the crisis between Ukraine and Russia. Furthermore, President Putin has decreed that Russia would demand ruble payment from the EU for natural gas purchases. This move by President Putin could cause further energy price shocks as the demand for the ruble could be interpreted as a way for Russia to support its failing currency.

On the technical side, EURUSD has found support at our previously estimated level of 1.0985. A new steady uptrend seems to have formed for EURUSD as the Greenback continues to weaken. RSI for the pair sits at 43.31 as of writing. On the four hour chart, EURUSD is trading above its 50-day SMA but below its 100 and 200-day SMAs.

Resistance: 1.1127

Support: 1.0985, 1.0845

XAUUSD (4-Hour Chart)

Over the past six trading days, gold has been trading between the $1918 to $1942 per ounce price range. With market participants having no clear idea on when the Ukraine-Russia war could end, gold continues to be volatile but price movements remain within the $25 boundary and the extreme price volatility observed during the initial week of the war seems to have ended. However, recent interest rate hikes and inflation seems to have also helped buoy the precious metal.

On the technical side, our previously estimated support level of $1918 per ounce was successfully defended and the $1947 resistance level also seems untouchable without groundbreaking developments coming out of Eastern Europe. RSI for XAUUSD sits at 52.45 as of writing. On the four hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMAs.

Resistance: 1947, 1961

Support: 1918

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