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Risk sentiment weakens as Joe Biden meets the EU leaders today. They are expected to announce new sanctions against Russia in the coming hours. There is a possibility of a ban on Russian oil imports to Europe.

One of the biggest worries - to lose the Russian gas which stands for 40% of European gas imports, has partially eased after Qatar agreed to supply gas to Europe, but the latter agreement is a long-term solution and the weaning from the Russian oil won’t be immediate. Therefore, Germany and Hungary are not necessarily in for a Russian energy ban. But in reality, that’s The Step that needs to be taken if Europe wants Russia to get hurt enough to ease the intensity of its attack on Ukraine.

Uncertainties about Russian oil injects volatility in oil trading. We see decent positive and negative swings, but the bulls have the upper hand. The barrel of US crude consolidates near $115pb this morning, and the positive pressure is here to stay until there is more clarity regarding the new sanctions. If Europe decides to walk away from the Russian oil, we will certainly see another leg up in oil prices - although a part of such risk is certainly already priced in. And if not, we shall see oil return toward the $100pb level. Yet, the tight supply and rising demand in global oil market will certainly throw a floor under any short-term price pullback. The 50-DMA is the major support to the actual rally, and stands a touch below the $98 mark presently.

Major Russian shares start trading

Russian market partially opens today, after but only circa 30 Russian company shares will be allowed to trade for a shortened four-hour session if the trading doesn’t stop due to a move above 15% within the session, including the influential names such as Gazprom or Sberbank.

Foreigners won’t be allowed to sell their stake until April 1st, and short-selling will be banned. And because most of the market was made up of international investors, we will not get a clear picture of the valuations immediately.

Plus, Russia will likely support the price action to temper the first day volatility, yet the medium-term outlook is gloomy. In fact, Gazprom and Sberbank lost more than 99% of their value in London trading after the invasion began.

Putin wants Rubles!

Putin now demands rubles in exchange of its natural gas supply in an attempt to support the falling ruble and to reduce the risk of holding foreign currencies as sanctions become heavier to stand.

The dollar-ruble is back below the 100 mark after having come closer to 140 level in the first days of invasion. The latest move could help throw a floor under the ruble’s short-term depreciation as it will increase demand in rubles significantly. In fact, the Europeans pay $285 million every day to buy the Russian oil alone.

But, if Europeans decide to walk away from the Russian oil, the impact of the latest move will be lessened. Will they have the guts to do so? It’s just a question of how far both parties are willing to go in terms of using their economic or military power.

In the FX

With the escalating tensions into today’s Europe – Biden meeting, the dollar firmed against major peers. The EURUSD slipped below the 1.10 mark again, as the European addition of Russian oil could cost the continent a lot in terms of inflation and economic growth. The sharp rise in energy costs and potential supply disruptions will also force the European Central Bank’s (ECB) hand to become more aggressively hawkish to avoid an overheating inflation in the zone, as inflation – at the current levels could no longer be ignored. the winds could rapidly change direction in the actual environment of high geopolitical uncertainties. For now, investors don’t have the courage to buy the DAX past the 14500 mark.

And oh, the EU is also expected to unveil new legislation, as soon as today, to curb the market power of companies that are worth at least 75 billion euros and that run one core platform service and have 45000 active users. So the US giants like Google and Amazon are obviously the main target, but there are some European companies such as the Dutch booking.com, that could feel the pinch of new rules, along with the prospects of rising inflation and tighter monetary policies.

So what do investors do in surging inflation environment? Mohammad El-Erian advises cutting equity exposures due to the mounting risk of stagflation – which is the combination of high inflation and slow growth / or high unemployment that would come along with it. UBS likes hedging portfolios with energy and commodity stocks, while BNP says shorting 10-year treasury futures could be a good hedge against soaring inflation, given that the rising inflation will boost the Fed tightening which will, at some point, involve balance sheet reduction and a higher downside pressure on treasuries.

So speaking of treasuries, we saw yesterday a much-needed easing in the treasury selloff, though the outlook for treasuries remain bearish, which means that the yields should keep rising. The US 10-year yield

Gold tests the $1950 offers, and there is potential for a further advance as uncertainties loom and the market lacks a clear direction, or lacks a clear explanation of why it bounced back so sharply. I believe there is still the possibility of a rebound toward the $2000 mark. The steep rise in US yields is of course a turn off for investors in the absence of clear loss of appetite, but if things are to get uglier, gold is a good refuge.

Daily Pivots: (S1) 158.99; (P) 160.05; (R1) 161.06; More...

Intraday bias in GBP/JPY is turned neutral with current retreat and some consolidations could be seen. But downside should be contained above 156.35 minor support to bring another rally. On the upside, above 161.07 will continue larger up trend, and target 61.8% projection of 136.96 to 158.19 from 150.95 at 164.07.

In the bigger picture, up trend from 123.94 (2020 low) should still be in progress, and notable support from 55 week EMA affirms medium term bullishness. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93. Sustained break there will be a long term bullish signal. This will now remain the favored case as long as 148.94 support holds.

Daily Pivots: (S1) 132.50; (P) 133.20; (R1) 134.06; More....

Intraday bias in EUR/JPY remains on the upside with focus on 134.11 high. Sustains break there will confirm resumption of larger up trend next target will be 136.53 medium term projection level. On the downside, though, break of 131.36 minor support will delay the bullish case and turn bias neutral first.

In the bigger picture, current development suggests that corrective pattern from 134.11 has completed at 124.37 already. Firm break of 134.11 will resume the up trend from 114.42 (2020 low). Next target is 61.8% projection of 114.42 to 134.11 from 124.37 at 136.53, and then 137.49 (2018 high). This will now remain the favored case as long as 124.37 support holds.

Daily Pivots: (S1) 0.8309; (P) 0.8323; (R1) 0.8351; More...

EUR/GBP is recovering mildly, but further fall is still expected with 0.8358 minor resistance intact. Fall from 0.8456 should target a retest on 0.8201 low. Break there will resume larger down trend. On the upside, firm break of 0.8476 structural resistance will carry larger bullish implication and target 0.8598 resistance next.

In the bigger picture, the down trend from 0.9499 is expected to continue as long as 0.8476 resistance holds. Sustained trading below 0.8276 support will argue that the whole up trend from 0.6935 (2015 low) has reversed. Deeper fall should be seen to 61.8% retracement of 0.6935 to 0.9499 at 0.7917 next. However, firm break of 0.8476 will indicate medium term bottoming at least. Focus will be back on 55 week EMA (now at 0.8523) for more evidence of bullish reversal.

Daily Pivots: (S1) 1.4626; (P) 1.4716; (R1) 1.4769; More...

Intraday bias in EUR/AUD remains on the downside for the moment. Fall from 1.5327 is still in progress to retest 1.4561 low. Firm break there will resume larger down trend from 1.9799. On the upside, however, break of 1.4986 minor resistance will turn bias back to the upside, and extend the pattern from 1.4561 will another rising leg.

In the bigger picture, fall from 1.9799 is seen as a long term impulsive move. Next target is 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). Some support could be seen there to bring interim rebound. But overall, break of 1.5354 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of recovery.

Daily Pivots: (S1) 1.0216; (P) 1.0266; (R1) 1.0293; More....

Intraday bias in EUR/CHF remains neutral for the moment. On the upside, break of 1.0400 would resume the rebound from 0.9970 to 1.0610 key structural resistance. However, break of 1.0184 minor support will argue that the rebound is finished, ahead of 38.2% retracement of 1.1149 to 0.9970 at 1.0420. In this case, intraday bias will be turned back to the downside for retesting 0.9970 low.

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

Daily Pivots: (S1) 1.0979; (P) 1.1013; (R1) 1.1064; More...

Intraday bias in EUR/USD remains neutral at this point as range trading continues. On the downside, below 1.0899 minor support will turn bias back to the downside for 61.8% projection of 1.2265 to 1.1120 from 1.1494 at 1.0786. However, firm break of 1.1120 will confirm short term bottoming at 1.0805. Bias will be back on the upside for 55 day EMA (now at 1.1178) and above.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1494 resistance holds. Firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next. Nevertheless, break of 1.1494 will maintain medium term neutral outlook, and extending term range trading first.

Daily Pivots: (S1) 1.3154; (P) 1.3227; (R1) 1.3278; More...

Intraday bias in GBP/USD remains neutral at this point. On the downside, break of 1.3119 minor support will turn bias back to the downside for retesting 1.2999. Firm break there will resume larger down trend from 1.4248. On the upside, above 1.3297 will resume the rebound to 55 day EMA (now at 1.3347). Sustained break there will target medium term channel resistance (now at 1.3590).

In the bigger picture, current development suggests that the up trend from 1.1409 (2020 low) has completed at 1.4248. Decline from 1.4248 could still be a corrective move, or it could be the start of a long term down trend. In either case, deeper decline would be seen back to 61.8% retracement of 2.1161 to 1.1409 at 1.2493. In any case, break of 1.3748 resistance is needed to indicate medium term bottoming, or outlook will stay bearish.

Daily Pivots: (S1) 0.9287; (P) 0.9322; (R1) 0.9343; More....

Intraday bias in USD/CHF stays neutral at this point. On the downside, below 0.9293 will extend the pull back from 0.9459 to 55 day EMA (now at 0.9255). On the upside, above 0.9381 minor resistance will flip bias back to the upside. Firm break of 0.9471 will resume the rise from 0.8756 to 61.8% projection of 0.8756 to 0.9471 from 0.9090 at 0.9532.

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 whole down trend form 1.0342 (2016 high), has completed with waves down to 0.8756. A medium term up trend should be set up to target 1.0237/0342 resistance zone.

Daily Pivots: (S1) 120.69; (P) 121.06; (R1) 121.51; More...

No change in USD/JPY's outlook and intraday bias stays on the upside for 100% projection of 109.11 to 116.34 from 114.40 at 121.63. Sustained break there will pave the way to 161.8% projection 126.09, which is close to 125.85 long term resistance. On the downside, below 120.37 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, the break of 118.65 resistance (2016 high) suggest that up trend from 98.97 (2016 low) is resuming, with rise from 101.18 (2020 low) as the third leg. Medium term outlook will remain bullish as long as 113.46 low. Next target is 125.85 (2015 high).