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Russia launched a full-scale invasion of Ukraine as Russian troops landed to Odessa while others crossed the border inti Kharkiv. There are attacks against 10 Ukrainian regions and The Guardian reported that there have been at least seven powerful airstrikes near an airport outside Kyiv where Ukraine’s military fighter bombers are kept.

The situation evolves extremely fast and operations of different kinds are reported. Air raid sirens are sounding in the capital Kyiv and Zelensky calls for martial law in national address.

It’s panic in the markets panic. The S&P500 futures are down by almost 2%, the Nasdaq futures slipped 2.5% and the DAX and Eurostoxx futures lost near 4% this morning. FTSE futures are down more than 2%, but the British blue-chip index should outperform its European and American peers due to its high commodity exposure.

In commodities, the European natural gas futures are already up 10%. Brent crude spiked above the $101 per barrel this morning, as US crude jumped past the $98 mark. Gold flirts with the $1950 per ounce and the bulls are already to target a further advance toward the $2000 threshold.

Corn futures are up more than 4%, wheat futures are up more than 5%, as Russia is the world’s largest grain wheat exporter. Oat futures, soybean futures, silver, platinum, palladium, all move higher this morning expect for sugar, cotton, orange juice and live cattle.

At this point, it’s impossible to bet on any scenario. We can only monitor closely the latest developments and stand ready for more volatility. The VIX index is around the 30 level and should spike higher within the next couple of hours.

The combined revenue exposure of the S&P500 to Russia and Ukraine is only about 1%. It’s not much. Yet, the rising energy and commodity prices are a growing threat for the US equities as they will put a further upside pressure on inflation and force the Federal Reserve’s (Fed) hand to act more aggressively to tame the inflation.

But on the other hand, could the Fed go full blast into an aggressive policy normalization while a war is taking a severe toll on the global growth and the economic recovery? Not so sure. It will sure give Jerome Powell the best excuse to hold fire and soften the market expectations.

Activity on fed funds futures now tells us that the probability of a 50bp hike is no more than around 10% this morning. Of course, the heightened demand in US sovereigns as a safe haven play explains most of the price action on the US papers, yet the Fed should also take into account that there is a war disruption to the global economy and tightening policy too fast may not be a good idea, even with the skyrocketing inflation.

Rising energy prices are also a big headache for Europe, as 40% of Europe’s natural gas and 30% of its oil supplies come from Russia. Yesterday, the data confirmed that inflation in the Eurozone advanced to 5.1% in January, and the February numbers will be even more scary. Yet, the ECB cannot do much about it right now, as the geopolitical tensions could take a severe toll on the economy and the economy needs the ECB’s support.

In the FX, the US dollar index is trending higher this morning and the US dollar is certainly a ‘safe’ tactical currency play as the Ukrainian tensions escalate.

One place that’s not safe is Bitcoin, as the coin has been very vulnerable to both the hawkish Fed expectations and the geopolitical tensions. If the situation in the Ukraine worsens, we could see the price of a coin fall toward the $30K and even below, depending on how bad the situation is. The other cryptocurrencies will also feel the pinch of the Ukrainian war. Remember, when Bitcoin sneezes, all the crypto-industry catches cold. There is also the fact that the higher energy prices make crypto mining more expensive. So that’s also a fundamental reason that prevents Bitcoin from being a safe haven asset in the actual environment.

Daily Pivots: (S1) 1.1283; (P) 1.1321; (R1) 1.1341; More...

Break of 1.1265 minor support should confirm that EUR/USD's rebound from 1.1120 has completed at 1.1494, after rejection by 1.1482 resistance. Intraday bias is back on the downside for retesting 1.1120 low first. Firm break there will resume larger down trend from 1.2348. Next target is 61.8% projection of 1.2265 to 1.1120 from 1.1494 at 1.0786. For now, risk will stay on the downside as long as 1.1394 minor resistance holds, in case of recovery.

In the bigger picture, the decline from 1.2348 (2021 high) is seen as a leg inside the range pattern from 1.2555 (2018 high). Sustained trading above 55 week EMA (now at 1.1593) will argue that it has completed and stronger rise would be seen back towards top of the range between 1.2348 and 1.2555. However, 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.

Daily Pivots: (S1) 1.3514; (P) 1.3567; (R1) 1.3599; More...

GBP/USD's break of 1.3485 support suggests that recovery from 1.3356 has completed, and fall from 1.3748 is ready to resume. intraday bias is back on the downside for 1.3356 support first. Break there target a test on 1.3158 low. For now, risk will stay on the downside as long as 1.3642 resistance holds, in case of recovery.

In the bigger picture, as long as 38.2% retracement of 1.1409 to 1.4248 at 1.3164 holds, up trend from 1.1409 (2020 low) is still in progress. On resumption, next target will be 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Nevertheless sustained break of 1.3164 will argue that whole rise from 1.1409 has completed and bring deeper fall to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9162; (P) 0.9191; (R1) 0.9212; More....

Sideway trading continues in USD/CHF and intraday bias remains neutral. 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.

Daily Pivots: (S1) 114.91; (P) 115.05; (R1) 115.18; More...

USD/JPY's fall from 116.33 resumed after brief recovery and intraday bias is back on the downside. Such decline is seen as the third leg of the corrective pattern from 116.34. Break of 114.14 will target 113.46 support and below. For now, risk will stay on the downside as long as 115.23 minor resistance holds, in case of recovery.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high). Sustained break there will pave the way to 120.85 (2015 high) and raise the chance of long term up trend resumption. This will remain the favored case as long as 55 week EMA (now at 111.61) holds.

Daily Pivots: (S1) 0.7206; (P) 0.7245; (R1) 0.7271; More...

Intraday bias in AUD/USD is turned neutral again with the sharp fall from 0.7282. 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.

Daily Pivots: (S1) 1.2688; (P) 1.2729; (R1) 1.2777; More...

Range trading continues in USD/CAD and intraday bias remains neutral at this point. Further rally is expected with 1.2634 support intact. On the upside, break of 1.2795 will resume the rise from 1.2448 to 1.2963 resistance next. However, break of 1.2634 support 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.

Daily Pivots: (S1) 155.35; (P) 156.07; (R1) 156.52; More...

GBP/JPY's break of 155.11 minor support should confirm rejection by 158.19 resistance. Fall from 158.03 is seen as the third leg of the corrective pattern from 158.19. Intraday bias is back on the downside for 152.88 support firm. Break will target 148.94 support next. For now, risk will stay on the downside as long as 156.75 minor resistance holds, in case of recovery.

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 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.

Daily Pivots: (S1) 129.74; (P) 130.23; (R1) 130.50; More....

Intraday bias in EUR/JPY is back on the downside as fall from 133.13 resumed after brief recovery. Such decline is seen as another falling leg of the corrective pattern from 134.11. Break of 128.23 support will target 127.36 low and below. For now, risk will stay on the downside as long as 130.03 support turned resistance holds, in case of recovery.

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.

Daily Pivots: (S1) 0.8304; (P) 0.8343; (R1) 0.8376; More...

Intraday bias in EUR/GBP is back on the downside as fall from 0.8476 resumes. Deeper decline could be seen to 0.8282 low. Sustained break of 0.8276 key long term support will carry larger bearish implication. On the upside, above 0.8381 minor resistance will turn bias back to the upside for 0.8476 resistance. Break there will resume the rebound from 0.8282.

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.