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USD/CHF continued to gyrate in established range last week and outlook is unchanged. Initial bias stays neutral this week first. Choppy rise from 0.8925 would still be in favor to extend higher as long as 0.9090 support holds. Break of 0.9341 will target 0.9372 resistance and then 0.9471. On the downside, however, break of 0.9090 will bring deeper fall back to 0.8925 support.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that the trend has already reversed and rebound the rally from 0.8756 with another impulsive move.

In the long term picture, price actions from 0.7065 (2011 low) are currently seen as developing into a long term corrective pattern, at least until a firm break of 1.0342 resistance.

AUD/USD rose to 0.7282 last week but retreated sharply then. Overall, it's staying above 0.7085 support and further rise is in favor. Initial bias is neutral this week first. On the upside, decisive break of 0.7313 resistance will argue that correction from 0.8006 has completed at 0.6966, after hitting 0.6991 key support. Outlook will be turned bullish for 0.7555 resistance next. However, break of 0.7085 support will retain near term bearishness and bring retest of 0.6966 low.

In the bigger picture, focus remains on 0.6991 key structural support. Sustained break there will argue that the whole up trend from 0.5506 might be finished at 0.8006, after rejection by 0.8135 long term resistance. Deeper decline would then be seen back to 61.8% retracement of 0.5506 to 0.8006 at 0.6461. Meanwhile, strong rebound from 0.6991 will retain medium term bullishness. That is, whole up trend from 0.5506 is still in progress.

In the longer term picture, focus remains on 0.8135 structural resistance. Decisive break there will argue that rise from 0.5506 is developing into a long term up trend that reverses whole down trend from 1.1079 (2011 high). However, rejection by 0.8135 will keep long term outlook neutral at best.

USD/CAD's rebound from 1.2448 resumed and surged to 1.2876, but retreated sharply since then. Initial bias is neutral this week first, but further rise will remain in favor as long as 1.2680 support holds. Break of 1.2876 will resume the rise to 1.2963 resistance. On the downside, however, break of 1.2680 will turn bias back to the downside for 1.2448 support instead.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

In the longer term picture, we're viewing price actions from 1.4689 as a consolidation pattern. Thus, up trend from 0.9506 (2007 low) is still expected to resume at a later stage. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048. However, firm break of 1.2061 support will argue that USD/CAD has already started a long term down trend. Next target is 61.8% retracement of 0.9406 to 1.4689 at 1.1424.

EUR/GBP's pull back from 0.8476 could have completed at 0.8304 last week. Initial bias is now mildly on the upside for 0.8476 resistance first. Break there will resume the rebound from 0.8282 to 0.8598 key resistance level. On the downside, though, break of 0.8304 will turn bias back to the downside for 0.8282 low again.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen a corrective pattern that should be contained by 0.8276 long term support (2019 low). Sustained trading above 38.2% retracement of 0.9499 to 0.8282 at 0.8747 will affirm this bullish case. However, sustained break of 0.8276 will argue that the long term trend has reversed. Deeper decline would be seen to 61.8% retracement of 0.6935 to 0.9499 at 0.7917.

In the long term picture, outlook will stay bullish as long as 0.8276 support holds. Break of 0.9499 is in favor at a later stage, to resume the up trend from 0.6935 (2015 low). However, sustained break of 0.8276 will indicate long term trend reversal, and target 61.8% retracement of 0.6935 to 0.9499 at 0.7917, and possibly below.

EUR/AUD's decline and break of 1.5559 support last week suggests that rebound from 1.5354 has completed with three waves up to 1.6223. Initial bias remains on the downside this week for 1.5250/5354 support zone. For now, risk will stay on the downside as long as 1.5837 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.5250 low are seen as a corrective pattern. Further extension could be seen and another rise cannot be ruled out. But strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

In the longer term picture, fall from 1.9799 (2020 high) is seen as a long term down trend. Further decline will remain in favor as long as 38.2% retracement of 1.9799 to 1.5250 at 1.6988 holds. Break of 1.5250 will target 61.8 retracement of 1.1602 (2012 low) to 1.9799 at 1.4733

EUR/CHF dropped sharply to 1.0277 last week but recovered since then. Initial bias is neutral this week first. Further decline is still expected as long as 1.0459 minor resistance holds. Sustained trading below 1.0298 will extend larger down trend target 61.8% projection of 1.0936 to 1.0298 from 1.0610 at 1.0216. However, strong break of 1.0459 will bring further rebound to 1.0610 resistance instead.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. Sustained break there will target 100% projection at 0.9650. In any case, break of 1.0610 resistance is needed to be the first sign of bottoming. Otherwise, outlook will remain bearish.

In the long term picture, prior rejection by 55 month EMA (now at 1.0947) maintains long term bearishness. Down trend from 1.2004 could still extend lower as long as 1.1149 resistance holds.

EUR/JPY dropped sharply to 127.90 last week but rebounded strongly to close at 130.20. The break of 130.03 support turned resistance argue that the fall from 133.13 might be completed with three waves down to 127.90 Initial bias is mildly on the upside this week first 131.89 resistance first. Break there will target 133.13. On the downside, though, break of 128.70 minor support will turn bias back to the downside, to resume the fall from 133.13 through 127.90.

In the bigger picture, price actions from 134.11 are currently seen as a consolidation pattern only. As long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.

In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Long term outlook will remain neutral until breakout from the range of 109.03/137.49.

GBP/JPY dropped sharply to 153.34 last week but recovered. Initial bias is neutral this week first. But further decline is expected with 155.48 resistance intact. Fall from 158.04 is seen as the third leg of the corrective pattern from 158.19. Break of 152.88 will target 148.94 support next. However, firm break of 155.48 will dampen this view and turn bias back to the upside for 158.04 resistance instead.

In the bigger picture, price actions from 158.19 are seen as developing into a consolidation pattern to up trend from 123.94 (2020 low). Downside should be contained by 38.2% retracement of 123.94 to 158.19 at 145.10 to bring rebound. Firm break of 158.19 will resume the up trend to long term fibonacci level at 167.93. However, sustained break of 145.10 will raise the chance of trend reversal and target 61.8% retracement at 137.02.

In the longer term picture, as long as 55 month EMA (now at 147.27) holds, we'd still favor more rally to 61.8% retracement of 195.86 to 122.75 at 167.93. But sustained trading below 55 month EMA will at least neutralize medium term bullishness and re-open the chance of revisiting 122.75 low (2016 low).

The markets had a roller coaster ride on Russia's invasion of Ukraine last week. At the time of writing, Kyiv remains in Ukrainian hands after three days of brutal attack by Russia. Wave of European leaders have start delivering supplies Ukraine while packages of sanctions were imposed, up to Russian President Vladmir Putin. It's also reported that cutting of Russia from SWIFT payment system would be taken in a matter of days.

Global stocks took a strong U-turn after initial dive during the week. But risks will remain on the downside for the near term at least. Gold and oil prices spiked higher but quickly retreated. More upside is still in favor in both risk sentiment commodity. In the currency markets, Aussie and Kiwi ended as the strongest ones for the week, followed by Canadian. European majors were also hammed, with Sterling as the worst. Dollar and Yen just ended mixed.

S&P closed the week up, but still more downside expected

S&P 500 staged a strong U-turn after diving to as low as 4114.65 and closed at 4384.65, added 35 pts for the week. 55 week EMA (now at 4307.38) was defended for now. But overall, price actions from 4818.62 is seen as developing into a correction to whole up trend from 2191.86.

Deeper fall is expected as long as 4595.31 resistance holds. SPX would target 38.2% retracement of 2191.86 to 4818.62 at 3815.19. Break of 4595.31 might bring stronger rebound. But even in this case, upside should be rejected by 4818.62 to bring at least one more falling leg.

The picture DAX is similar. Price actions from 16290.19 are developing into a correction to whole rise from 8255.65. Deeper decline is expected to 38.2% retracement of 8255.65 to 16290.19 at 13220.99.

Nikkei is also in correction to the up trend from 16358.19 to 370795.77. Deeper fall should be seen to 38.2% retracement oat 25280.61.

Dollar index struggled to break through 97.72 fibonacci level

Dollar index edged higher to 97.73 last week, but couldn't break through 61.8% retracement of 102.99 to 89.20 at 97.72. Upside momentum is also relatively weak as seen in weekly MACD. Still, further rise is in favor as long as 94.62 support holds. Sustained break of 97.72 could bring upside acceleration towards 102.99 high. However, break of 94.62 support will now suggest medium term topping and bring deeper pull back.

Gold, another rally to retest 2074 still expected after volatile week

Gold had an extremely volatile week, spiking higher to 1974.32 but close the week down at 1888.06. Some range trading should be seen for the near term. But downside should be contained above 1853.70 cluster support (61.8% retracement of 1780.10 to 1974.32 at 1854.29) to bring rebound.

At this point, the correction from 2074.84 is seen as completed at 1682.60. Another rise is expected, at a later stage, through 1974.32 to retest 2074.84 high. Nevertheless, firm break of 1853.70 will dampen this week and extend the correction with another falling leg.

WTI oil to consolidate after spiking to 102.19

WTI crude oil spiked higher to 102.19 last week but quickly retreated to close at 93.35. Some consolidation below 102.19 is likely for the near term. But downside should be contained by 38.2% retracement of 62.90 to 102.19 at 87.18 to bring rebound. Recent up trend is still expected to continue after the consolidation completes. Next target level will depend on the eventual depth of the correction.

GBP/AUD building up medium term bearishness with sharp decline

GBP/AUD was the biggest mover last week, losing -2.14%. For now, further decline will be expected as long as 1.8825 resistance holds, to 1.8123 support. Decisive break there will confirm that whole rise from 1.7412 has completed already. The three wave structure suggests that it's just a corrective move. In this case, the larger down trend from 2.0840 could be ready to resume through 1.7412 low in the medium term .

GBP/JPY Weekly Outlook

GBP/JPY dropped sharply to 153.34 last week but recovered. Initial bias is neutral this week first. But further decline is expected with 155.48 resistance intact. Fall from 158.04 is seen as the third leg of the corrective pattern from 158.19. Break of 152.88 will target 148.94 support next. However, firm break of 155.48 will dampen this view and turn bias back to the upside for 158.04 resistance instead.

In the bigger picture, price actions from 158.19 are seen as developing into a consolidation pattern to up trend from 123.94 (2020 low). Downside should be contained by 38.2% retracement of 123.94 to 158.19 at 145.10 to bring rebound. Firm break of 158.19 will resume the up trend to long term fibonacci level at 167.93. However, sustained break of 145.10 will raise the chance of trend reversal and target 61.8% retracement at 137.02.

In the longer term picture, as long as 55 month EMA (now at 147.27) holds, we'd still favor more rally to 61.8% retracement of 195.86 to 122.75 at 167.93. But sustained trading below 55 month EMA will at least neutralize medium term bullishness and re-open the chance of revisiting 122.75 low (2016 low).

Summary

United States: Russia-Ukraine Conflict May Push Up Prices, but Inflation Has Yet to Slow Spending

• The Russian invasion of Ukraine dominated news headlines this week, and we cover the economic and financial implications of the conflict in a number of sections. One of the initial implications of the Russia-Ukraine conflict domestically is that higher oil prices will likely keep inflation higher for longer. That said, while consumers continue to contend with higher prices we haven't yet seen inflation meaningfully weigh on spending.
• Next week: ISM Manufacturing (Tue), ISM Services (Thur), Nonfarm Payrolls (Fri)

International: Risk Assets Came Under Pressure This Week

• The military conflict sent risk-assets prices, particularly within the emerging markets, sharply lower. Sovereign bond yields jumped, while Russian credit default swap spreads spiked to the highest on record. Other risk-sensitive currencies and asset prices within the emerging markets fell sharply lower as well.
• Next week: India GDP (Mon), Bank of Canada Rate Decision (Wed), Brazil GDP (Fri)

Interest Rate Watch: Russia Roils the Rates Market

• Russia's invasion of Ukraine this week rocked financial markets and added additional uncertainty to the interest rate outlook. Initially, Treasury yields plunged across the entire curve, but yields have shaken off the initial shock.

Credit Market Insights: Small Businesses Are on the Mend, but Full Recovery May Be a Marathon

• Small Business Credit Survey data show small businesses' circumstances improved last year, but there remains a long road to pre-pandemic standards. But future growth expectations rose, and signal there's ample runway for small businesses' recovery to take off.

Topic of the Week: Some Economic Implications of the War Between Russia and Ukraine

• Parsing out the precise economic implications of the war is essentially impossible, but we lay out some data and scenarios in our column and report. While we are not necessarily forecasting that oil prices will remain well above recent averages, we use a macroeconometric model to analyze the potential economic implications of higher oil prices as a result of the recent hostilities.

Full report here.