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Market Overview February 11, 2022 by Solid ECN Securities

EURUSD
The European currency shows an active decline against the US dollar during the Asian session, developing an extremely uncertain corrective trend that can be traced this week. EUR/USD is testing the level of 1.1380 for a breakdown and is located not far from the local lows of the previous day. The pressure on the instrument's positions intensified yesterday with the publication of statistics on consumer inflation in the US, which strengthened the belief that the US Federal Reserve can act faster in terms of tightening monetary policy. In January, the Consumer Price Index rose by 0.6% in monthly terms and by 7.5% in annual terms, which turned out to be stronger than market forecasts at 0.5% and 7.3%, respectively. Consumer Inflation excluding Food and Energy over the same period increased by 0.6% MoM and by 6% YoY, which also turned out to be higher than the growth by 0.1% projected in both cases. Investors today are focused on the January statistics on consumer inflation in Germany.

GBPUSD
The British pound is trading downward against the US currency during the morning session, testing 1.3520 for a breakdown. The development of corrective dynamics is due to the appearance of strong US statistics on inflation, which forces investors to act ahead of the curve. There is practically no doubt that the US Federal Reserve will start a cycle of raising interest rates during the March meeting. Now the question is how fast the US regulator will tighten its monetary policy and whether the risks of rising consumer prices were correctly assessed from the very beginning. Today, investors expect the release of a block of macroeconomic statistics from the UK on GDP dynamics for Q4 2021. Forecasts suggest some slowdown in the national economy from 6.8% to 6.4%. In addition, December data on the dynamics of Industrial Production and NIESR GDP Estimate for January 2022 will be published during the day.

AUDUSD
The Australian dollar is developing a strong "bearish" momentum in tandem with the US currency, testing the level of 0.7120 for a breakdown and updating local lows from February 8. In addition to technical correction factors at the end of the week, the downtrend was facilitated by strong macroeconomic statistics on inflation in the US, published the day before. The data showed a further acceleration in domestic consumer inflation to 7.5%, which is likely to require the US Federal Reserve to tighten monetary policy sooner during 2022. The start of the interest rate hike cycle is expected in March, when the quantitative easing (QE) program comes to an end. The focus of investors today will also be on the Fed Monetary Policy Report and data on Michigan Consumer Sentiment Index for February.

USDJPY
The US dollar shows weak growth against the Japanese yen in Asian trading, trying to consolidate above 116.00 and updating local highs since the beginning of the year. The day before, the US currency received a strong impetus to growth, reacting to data on the dynamics of consumer prices in the US, continuing to update record highs. It is likely that rising inflation will require the US Federal Reserve to take additional steps to tighten monetary policy, but so far the US regulator calls for a gradual and balanced approach. The dollar received additional support yesterday from the US Monthly Budget Statement for January, which showed a notable increase in the budget surplus by 119B dollars after a deficit of 21B dollars in December. Analysts were expecting a 25B dollar surplus.

XAUUSD
Gold prices are declining, correcting after the upward rally of January 31. Significant pressure on the instrument is exerted by macroeconomic statistics from the US on inflation for January, released the day before. Annual consumer price growth accelerated to 7.5%, the highest since 1982 and above average market forecasts of 7.3%. Rising inflationary pressures have led to a revision of a possible schedule for an interest rate hike in 2022. In particular, now most of the analysts expect a rate correction during the March meeting of the US Federal Reserve at once by 50 basis points.​

 

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NZDUSD market insight by Solid ECN Securities
The US dollar takes the lead in the pair

The New Zealand currency continues to trade without pronounced dynamics amid growing tensions caused by coronavirus restrictions. At the moment, the NZDUSD pair is close to 0.6635.

At the end of January, New Zealand moved to the maximum "red" alert level due to the discovery of 12 cases of infection with the Omicron strain, as a result of which the government tightened quarantine restrictions. Hundreds of protesters took to the streets in Wellington to blockade the streets leading to the New Zealand Parliament against mandatory vaccinations and new sanitary measures. However, Prime Minister Jacinda Ardern said the protesters did not represent the views of the majority of the population. Currently, the focus of the spread of infection is recorded in Auckland. Despite the difficult epidemiological situation, the country's economy slowly recovers.

Only the manufacturing sector is lagging. Consumer activity for the same period, on the contrary, increased, and the volume of retail sales using electronic cards increased.

The USD Index was able to break the narrow sideways range and began to rise again, reaching the level of 96. The main factor supporting the US dollar was the January report on consumer prices, which reached 7.5%, significantly exceeding 7.0% in December. Also, to rising inflation, the labor market showed positive results. Thus, these data indicate that the US Federal Reserve has almost no other choice but to raise interest rates already during the March meeting.

Support and resistance
The asset moves within the global downtrend. Technical indicators keep a sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms local rising bars in the sell zone.

Support levels: 0.6602, 0.647.
Resistance levels: 0.6705, 0.686.​

 

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NZDUSD market insights by Solid ECN Securities
The instrument develops a downward trend

The pressure on the positions of the New Zealand dollar, also to the growth of the US currency, is exerted by poor macroeconomic statistics from New Zealand. At the beginning of the new week, the macroeconomic background remains mostly negative. Thus, the index of activity in the services sector from Business NZ for January fell from 49.8 to 45.9 points, which was worse than the average expectations of analysts.

Support and resistance
On the daily chart, Bollinger bands smoothly reverse into a horizontal plane. The price range narrows, reflecting the ambiguous nature of trading in the short term. The MACD indicator reverses downwards, forming a new sell signal (the histogram tries to consolidate below the signal line). Stochastic shows similar dynamics but the indicator line rapidly approaches its lows, indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 0.665, 0.67, 0.6732, 0.6761.
Support levels: 0.66, 0.6528, 0.65, 0.645.

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USDCAD Market Update by Solid ECN Securities
Interest rate hike risks support the US dollar

The US dollar shows ambiguous dynamics of trading against the Canadian currency during today's Asian session, holding near 1.273.

The instrument managed to demonstrate a moderate positive trend at the end of last week, which was supported by expectations of a further increase in the interest rate by the US Fed against the backdrop of a sharp rise in inflation in the country by 7.5%, which is the highest level since February 1982.

The Canadian dollar, in turn, is still under pressure from a weak report on the labor market, released at the beginning of the month, and expects new drivers for possible growth. On Wednesday, Canada will release a block of macroeconomic statistics on the dynamics of consumer prices in January. On the same day, Timothy Lane, the member of the Board of Governors of the Bank of Canada, will make a speech.

Support and resistance
Bollinger Bands in D1 chart show weak growth. The price range is actively narrowing, pointing at the ambiguous nature of trading in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic grows more steadily but is rapidly approaching its highs, which reflects risks of the overbought USD in the ultra-short term.

Resistance levels: 1.275, 1.2786, 1.2812, 1.285.
Support levels: 1.27, 1.265, 1.26, 1.2558.​

 

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GBPUSD market update by Solid ECn Securities
UK GDP statistics disappointed the market

The UK currency continues unsuccessful attempts to consolidate in the uptrend. The ambiguous macroeconomic statistics do not allow the pound to strengthen its positions, and at the moment, the GBPUSD pair is trading within a sideways trend around 1.3543.

The asset's dynamics may maintain until the end of the day since the US Federal Reserve announced an extraordinary meeting of the regulator's managers tonight, the results of which will determine the direction of the pair movement. As stated, the meeting will be held following the accelerated procedures, and it is expected to consider the issue of changing rates. Most analysts agree that holding the meeting right now is an attempt by the regulator to justify its impotence and lost time, which led to a historical rise in inflation to 7.5%. Experts suggest that the department will not dare to adjust the indicators today but publish a schedule of increases soon.

Support and resistance
The instrument is traded within the global downward channel, forming a local sideways channel. Technical indicators keep a poor buy signal: fast EMAs on the Alligator indicator are above the signal one, and the AO oscillator histogram is trading close to the transition level.

Resistance levels: 1.3600, 1.372.
Support levels: 1.3504, 1.3366.​

 

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USDJPY market insights by Solid ECN Securities

US Fed may raise rates today
Due to the stabilization of the US currency, the USDJPY pair is correcting around the level of 115.5.

Yesterday, the Japanese currency made a significant leap after the Bank of Japan announced the first purchase of government debt bonds (JGB) in the last three years. Previously, such an operation was carried out at the end of July 2018. According to the regulator, the buyback will be carried out in an unlimited amount on Monday to keep long-term interest rates under control. The main reason for this move is that the underlying yield of the 10-year JGB bonds approached the upper limit of 0.25%, amounting to 0.23%. The policy of the Bank of Japan suggests that the rate on these bonds should be close to zero, but this does not happen, as a result of which the regulator decided to intervene.

Today may become one of the most volatile for the financial markets since it is on February 14 that the US Federal Reserve has scheduled its emergency meeting. The American regulator decided to discuss the issue of interest rates ahead of the usual schedule, according to which the next meeting should be held in March.

According to the US regulator, the reason for holding the meeting accelerated was the increase in inflation to 7.5% from 7.0% a month earlier. If the rate is raised today, the dollar could significantly leap upwards.

Support and resistance
The asset is correcting within the rising global channel, approaching the resistance line. Technical indicators keep a stable buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms upward bars.

Resistance levels: 116.1, 117.8.
Support levels: 114.6, 113.5.​

 

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S&P 500 Market insights by Solid ECN Securities​

Investors are waiting for signals from the US Fed
The S&P 500 is correcting lower, trading at 4425 amid a disappointing inflation report. Consumer prices in the US rose by 7.5% in annual terms, which is a significant obstacle to the development of national business. Such a high figure cancels out almost all the profits that companies show, and in this regard, today's emergency meeting of the US Federal Reserve is seen as the only support measure.

The growth leaders in the index are Newell Brands Inc. (+11.07%), Baker Hughes Co. (+6.20%), Occidental Petroleum Corp. (+5.65%). Among the leaders of the decline are Under Armour A (-12.49%), Under Armour C (-11.37%), AMD Inc. (-10.01%).

Support and resistance
The index quotes are trading in a local downtrend, forming another wave of decline. Technical indicators are still in the state of a weak sell signal: the fluctuation range of the Alligator indicator EMAs is actively narrowing and the histogram of the AO oscillator is trading in the sales area, approaching the transition level.

Support levels: 4400, 4265.
Resistance levels: 4462, 4580.​

 

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BTCUSD market insight by Solid ECN​

The decline of "digital gold" may continue
Last week, the BTCUSD pair had ambiguous dynamics. At first, the price rose above the level of 45800 but then lost the gained positions, returning to the area of 42000.

Experts associate the movement of the cryptocurrency market with the release of fundamental American statistics. The rise in prices occurred against the backdrop of positive January data on the US labor market, illustrating the recovery of the national economy, and the decline was the result of poor January data on inflation.

This week, the market decline may continue if the January US PPI rises (data will be released on Tuesday), and there is "hawkish" rhetoric in the minutes of the last meeting of the regulator (to be published on Wednesday). So far, department officials have not decided on the tactics of further actions and speak out both for and against a sharp increase in the rate, leaving investors in uncertainty.

Support and resistance
Now the price is at 42000. The consolidation below it allows a decline to 40000, 37500, 35000. The key "bullish" level is 43750. Its breakout allows growth to 46875 and 50000.

The indicators do not give a single signal: Bollinger bands are directed upwards, the MACD histogram is stable in the positive zone, Stochastic is directed downwards but is entering the oversold zone.

Resistance levels: 43750, 46875, 50000.
Support levels: 42000, 40000, 37500, 35000.​

 

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Microsoft Corp. market insights by Solid ECN Securities

The price has set new local lows
At the end of January, Microsoft Corp. reported for Q2 2022. Revenue grew by 20%, exceeding the expectations of The Wall Street analysts. The company sees steady demand for its cloud computing and productivity software. Thus, the Azure cloud infrastructure platform increased revenue by 46%, and commercial revenue from Office 365 increased by 19%. In general, the corporation is becoming more and more profitable, expanding its activities around the world. Operating and net profit increased by 24% and 21%. Earnings per share rose 22% to 2.48 dollars, also exceeding market expectations of 2.31 dollars.

Support and resistance
There is a corrective movement in the company's shares, the instrument has set new local lows, and at the moment the quotes are consolidating. The key range is 292-317. The instrument has the potential to further correction. Indicators point out the strength of sellers: the price has fixed below MA (50) and MA (200), the MACD histogram has started to decline again. Positions are to be opened from key levels.

Comparing company's multiplier with its competitors in the industry, we can say that #MSFT shares are neutral.

Resistance levels: 306, 317, 323.5.
Support levels: 292, 281, 272.​

 

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Crude Oil market insight by Solid ECN Securities
Prices renew record highs

At the beginning of the week, the quotes of "black gold" approached the level of 96.00 for the first time since October 2014, reacting to a further escalation of tension in Eastern Europe. In particular, due to the situation around Ukraine, there were concerns among traders about the export of Russian oil and the introduction of new Western sanctions.

During the day, the US will release statistics on manufacturing inflation and publish the traditional report from the American Petroleum Institute (API) on stocks for February 11. The previous report showed a decrease of 2.025M barrels.

Support and resistance
Bollinger bands show steady growth on the daily chart: the price range expands from above but not as fast as the "bullish" sentiment develops. MACD grows, keeping a poor buy signal and above the signal line. Stochastic demonstrates similar dynamics, but the indicator line is close to its highs, reflecting that the instrument may become overbought in the ultra-short term.

Resistance levels: 94.5, 95.5, 96.5, 97.5.
Support levels: 93.34, 92, 91, 90.​

 

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USDJPY market insight by Solid ECN Securities

The US dollar holds its previous positions.
The yen continues to be a shelter asset as the situation in Eastern Europe remains tense and forces investors to look for alternatives to their traditional portfolios, which have recently been characterized by high-risk demand. In turn, the US dollar is also quite attractive for market participants, given the prospects for an increase in the US Federal Reserve interest rate this year.

The macroeconomic statistics provides moderate support for the yen on Tuesday. Thus, Japan's Q4 GDP grew after a decline of 0.9% last month, although analysts expected the national economy to grow by 1.4%.

Support and resistance
On the daily chart, Bollinger bands reverse in the horizontal plane: the price range remains practically unchanged, indicating an ambiguous nature of trading in the short term. MACD falls, showing a poor sell signal (the histogram is below the signal line). Stochastic keeps a confident downward trend but is rapidly approaching its lows, indicating that the dollar may become oversold in the ultra-short term.

Resistance levels: 115.67, 116, 116.34, 117.
Support levels: 115, 114.5, 114, 113.5.​

 

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Gold market insight by Solid ECN Securities
Investors build up positions in gold again

Gold is trading near the three-month high due to increased demand for shelter assets. At the moment, the metal quotes have broken the level of $1,850 per ounce and are trying to consolidate above it.

The upward dynamics in the asset is the reaction of investors to the likelihood of an imminent increase in the US Federal Reserve interest rate against the backdrop of rising annual inflation, which last month rose to a record high for 40 years and amounted to 7.5%.

Traders fear that instead of the expected 0.25%, the agency will immediately increase the figure by 0.50% or even more to prevent the continuation of negative dynamics with consumer prices in the country. Experts note that this could lead to a sharp drop in the bond and stock markets, which will turn into even more problems for the regulator. The bond market is at its peak in 2019, and the yield on 10-year US Treasuries is already close to 2%, amounting to 1.960%. Investors no longer believe in the further growth of securities and opt for gold, noting that the US Federal Reserve cannot stop the emerging negative trend, and as a result, the agency will again resort to measures to stimulate the economy.

Support and resistance
On the daily chart, the price has left the global sideways channel and is now trying to renew the high of the last year. Technical indicators keep a buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram is confidently trading in the buy zone, forming new rising bars.

Support levels: 1861, 1830.
Resistance levels: 1890, 1940.​

 

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How to trade using the RSI indicator

 

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How to Trade using the Bollinger bands indicator

 

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EURUSD market insights by Solid ECN Securities

Correction after lowering geopolitical risks.
The EURUSD pair slightly declines during the Asian session, correcting after strengthening positions yesterday, which was due to positive signals about the return of some Russian military personnel to their places of deployment after conducting exercises on the borders with Ukraine, so the risks of further escalation of political tension in the region have noticeably decreased.

Investors follow the macroeconomic statistics, which set the dynamics of the movement of the trading instrument earlier. In particular, data on employment and economic sentiment were published yesterday. Thus, the EU Q4 employment rate corrected from 1.0% to 0.5%, only 0.1% better than market expectations!

At the same time, the ZEW study recorded a milder decline in economic sentiment in the EU for February, while market forecasts suggested a sharp decline. In turn, the sentiment index in the German business environment in February increased from 51.7 to 54.3 points.

Support and resistance
Bollinger Bands show a moderate increase on the daily chart: the price range narrows, reflecting the ambiguous nature of trading in the nearest time intervals. MACD is falling, keeping a poor sell signal (the histogram is below the signal line). Stochastic rebounded from the level of 20 and reverses into an upward plane, indicating the risks of corrective growth in the ultra-short term.

Resistance levels: 1.1367, 1.14, 1.145, 1.15.
Support levels: 1.13, 1.1255, 1.122, 1.1185.

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GBPUSD Market insights by Solid ECN Securities

Development of flat dynamics in the short term.
GBPUSD has shown a poor upward trend against the US currency during the morning session, holding near the level of 1.355. Since the beginning of the month, it has been developing a generally flat dynamic in the short term. The instrument reacted insignificantly due to the improvement in the geopolitical situation in Eastern Europe after there were signs of a resolution of the tense situation solely from the standpoint of diplomacy.

Yesterday, the market focused on macroeconomic statistics from the UK. Thus, the indicator of average wages for December, excluding bonuses, slightly corrected which is better than market forecasts. In turn, wages, taking into account bonuses for the same period, increased, contrary to analysts' expectations of a slowdown to 3.9%. Jobless claims fell by 31.9K for January, while the unemployment rate for December was unchanged.

Support and resistance
Bollinger Bands show a moderate increase on the daily chart: the price range narrows, indicating an ambiguous nature of trading in the short term. MACD falls, keeping a poor sell signal and below the signal line. Stochastic shows similar dynamics and rapidly approaches its lows, indicating that GBP may become oversold in the ultra-short term.

Resistance levels: 1.3565, 1.36, 1.365, 1.37.
Support levels: 1.35, 1.346, 1.3435, 1.34.

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Gold market insight by Solid ECN Securities
Price retreated from all-time highs

Gold quotes are consolidating near the level of 1850 after a noticeable decline yesterday, when the XAUUSD pair retreated from its all-time highs since June 2021. On Tuesday, demand for safe assets declined noticeably after forecasts of upcoming hostilities in Eastern Europe did not come true. The Russian authorities announced the withdrawal of part of the troops to their places of deployment after military exercises in Belarus and diplomatic negotiations with interested parties. Against this background, investors switched their attention to other drivers, particularly to macroeconomic statistics from the United States.

Thus, traders monitor the dynamics of retail sales and industrial production. It is assumed that the figure may increase by 2% from 1.9% last month. Forecasts for the dynamics of industrial production are also positive and suggest an increase of 0.4% from the December value of 0.1%.

Support and resistance
On the daily chart, Bollinger Bands show a steady growth: the price range changes slightly but remains quite spacious for the current level of activity for the instrument. MACD grows, keeping a weakening buy signal (the histogram is above the signal line). Stochastic retreats from its highs, signaling in favor of the development of corrective dynamics in the ultra-short term.

Resistance levels: 1860, 1868, 1879, 1890.
Support levels: 1847, 1840, 1831, 1823.

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XRPUSD market insight by Solid ECN Securities

This week, the XRPUSD pair resumed growth after a downward correction towards 0.75 with primary targets at 0.91, and 0.9766.

At the moment, the key “bearish” level is 0.75, supported by the middle line of Bollinger bands. Its breakdown will give the prospect of developing a downward movement to the levels of 0.586 and 0.4883. Still, this option seems less likely since technical indicators signal the continuation of the existing trend: Bollinger Bands and Stochastic reverse upwards, the MACD histogram increases in the positive zone.

Support and resistance
Resistance levels: 0.91, 0.9766, 1.0742.
Support levels: 0.75, 0.5859, 0.4883.​

 

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AUDUSD Market insight by Solid ECN Securities

There is neutrality between the currencies in the pair
The AUDUSD pair corrects within a sideways trend amid the stabilization of the American currency and is currently trading around 0.7152.

The Australian dollar shows relative stability, which was reinforced by yesterday's monetary policy report from the Reserve Bank of Australia (RBA). According to the regulator, the outbreak of the Omicron coronavirus strain affected the pace of economic recovery but did not undermine its growth.

The USD Index currency also does not show a directional trend, and for the third day, it has been trading within a new narrow range near the level of 96, reached after an unscheduled meeting of the US Federal Reserve last Monday. As for macroeconomic data, the dollar was locally supported by the January report on the producer price index, which rose by 1.0% MoM and reached 9.7% YoY. The core producer price index, which excludes food and energy, added 8.3% YoY, better than the 7.9% expected by the market.

Support and resistance
On the global chart, the price moves within the local channel. Technical indicators are in a state of uncertainty: indicator Alligator's EMA fluctuations range narrowed almost completely, and the AO histogram, being in the sell zone, continues to form rising bars.

Resistance levels: 0.719, 0.7295.
Support levels: 0.7092, 0.698.​

 

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Brent Crude Oil market insight by Solid ECN Securities

Oil awaiting the US inventory statistics
Benchmark Brent Crude Oil prices are correcting downwards after closing at more than seven-year highs on Monday, retreating from a yearly high of $95 per barrel and currently trading just above $91. The correction in the asset is supported by reports about the withdrawal of part of the Russian troops from the border with Ukraine.

Also, investors are awaiting statistics on weekly inventories from the Energy Information Administration (EIA) after the American Petroleum Institute (API) reported a reduction in the figure by 1.076M barrels, which was below the expected value. According to preliminary forecasts, the EIA will record a decrease in inventories, which may increase pressure on asset quotes.

Support and resistance
The instrument moves within the Expanding formation global pattern on the global chart, having reached the resistance line. Technical indicators hold a weakening buy signal: indicator Alligator's EMA fluctuations range narrows, and the AO oscillator histogram forms local bars with a downward trend in the buy zone.

Resistance levels: 93, 95.38.
Support levels: 89.72, 85.32.​