EURO, EUR/USD, US Dollar, Crude Oil,AUD, JPY, FED, UKRAINE – Talking Points
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The Euro dipped after yet to be verified reports of mortar fire in the Ukraine
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Risk assets sold off and hawkish FOMC meeting minutes soon forgotten
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All eyes are on developments as markets remain on edge.Will EUR/USD breakout？
The Euro fell on the news of unconfirmed reports of mortar fire near the Ukranian border.
Markets went into a tailspin in the Asian afternoon after a Russian news agency, RIA, reported that Russian-backed separatists are claiming that the Ukraine army fired grenade mortars across the border.
RIA Novosti, sometimes referred to as RIAN or RIA, is a Russian state-owned domestic news agency and is headquartered in Moscow.
This comes after 24 hours of fluctuating tensions around the border. There was an initial ease when Russia declared that they had started moving their troops back to their home bases. But then US intelligence said that was not the case and that there are more troops heading to the area.
Secretary general of NATO Jens Stoltenberg said that there is no evidence of a de-escalation, and that Russia was building up troop numbers. The Kremlin denied the allegations but US Secretary of State Antony Blinken backed up the claims.
This is at a time when a large-scale cyberattack has been launched on Ukraine institutions. There is debate currently under way to determine if this is an act of war.
An emergency meeting of European leaders is scheduled to take place later today (Thursday).
In the US session overnight, there was more hawkishness revealed in the Feds FOMC meeting minutes released overnight from their last gathering.
Most notably, the minutes revealed that they could “remove policy accommodation at a faster pace than they currently anticipate.”
Crude oil started the day in Asia drifting south after positive stockpile numbers in the US and news that Iran could add 900,000 barrels a day by December if the nuclear talks go well and a deal is done soon.
Data from the EIA/DOE overnight showed oil inventories have surprisingly risen over the week by 1.1 million barrels, when the market was expecting a drop of 1.6 million.
Elsewhere, Australia‘s unemployment rate remained unchanged at 4.2% as expected. Japan’s rose by 3.6% month-on-month for December against -2.0% anticipated.
Of the G-10 currencies, the Aussie was the largest underperformer, and the Yen appreciated the most. This was mostly on the Ukraine news though. The US Dollar also found support.
Gold appreciated toward recent highs, currently trading near US$ 1,875 per ounce.
Looking ahead, after a number of ECB speakers, the US will see figures on housing starts and initial jobless claims.
EUR/USD Technical Analysis
EUR/USD briefly melted lower today to briefly touch the 21 and 55-day simple moving averages (SMA). But the move was rejected, and they could provide support on another test.
Support might also be at the pivot points of 1.12633, 1.12219 and 1.11861
On the topside, the 10 and 100-day SMAs may offer resistance as they lie just above a series of potential pivot point resistance levels at 1.13751, 1.13830, 1.13865 and 1.14830.
Further resistance could be at the previous high of 1.14949.