The US dollar strength will be a key factor today. I am expecting the weakness in the euro to continue and for other pairs to follow the greenback higher. Other than that the forex markets are not showing a clear risk-on or risk-off tone, so we have to use technical analysis for timing our entries.
The forex heatmap at the London open is showing a market with no clear direction. The US dollar is currently the strongest currency relative to the other majors and the New Zealand dollar is the weakest, so the short NZDUSD trend at least continues.
Lots of the moves today will be from updates out of Ukraine and from the repercussions of additional sanctions against Russia. Yesterday the European Union agreed to ban imports of Russian coal, though the Chinese will probably pick up the pieces for Russian exporters.
The economic calendar is very quiet today with Canadian employment and US final wholesale inventories giving the US session something to react to.
The DAX and French CAC are leading global indices higher, with the 14340 level a significant level of resistance for the bulls to breakthrough. A close above this level would show the price action leaving the descending channel, having found support at the daily high on 15th March. 15000 would be the next target for the upside
Brent is caught in a consolidation pattern on the H4 chart having found some support just below $100 per barrel. The next downside target is $94.76 and that would fill the gap from when the Russians invaded Ukraine. Looking at the commitment of traders, the commercials who are the producers, processors, etc. have reduced their natural short position, which suggests that they are comfortable with these prices and probably expect support to be found at this level.
Japan's seasonally adjusted Consumer Confidence Index decreased in March when compared to the previous month and came in at 32.8. The overall livelihood index dropped by 3.9 points from the previous month to 31.3, while the employment index marked a 1.2-point contraction, ending at 34.8. The index has been dropping since topping out at the beginning of the year and the yen is likely to fall during the coming sessions. The H4 price action on the USDJPY shows an inside candle breakout is probably going to continue the bullish trend with the 126.00 acting as a magnet.
The US dollar index is finally making a push higher into the $100 level. The Fibonacci extension that I have previously illustrated gives the 102.557 as the next level to target but I am expecting some profit-taking at the psychological round number. The US short-term yields are rising at the start of today’s session which will support a rising dollar for now, with the 20-year and 30-year dipping which will add inversion fears to the mix.