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DAILY ANALYSIS

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Forecasting Strategy for Short Term Trade

EUR/USD

The EUR/USD found support above 1.0930 and climbed back toward the daily high it hit on European hours at 1.0989, boosted by a stronger euro and a mixed US dollar. The key driver of price action continues to be the war in Ukraine. Volatility remains elevated, even among currencies. The economic calendar shows the US Producer Price Index due on Tuesday and on Wednesday, the critical event of the week: the Fed’s decision.

The FOMC is expected to hike the fed funds rate by 25 bps on Wednesday. If the Fed delivers as expected, it will be the first time since 2018, and attention would turn to signs about the future path of monetary policy. EUR/USD trades at around 1.0950 after meeting sellers at around 1.1000. Mounting tensions in Eastern Europe and international sanctions exacerbate a dismal market’s mood.

USD/JPY

The USD/JPY extends last Friday’s rally, above a 24-year-old downslope trendline broken on Friday, when the USD/JPY recorded a close at 117.27, and higher US Treasury yields underpin the USD/JPY pair. At the time of writing, the USD/JPY is trading at 117.99. Overnight, the USD/JPY climbed steadily towards the 118.00 mark, opening near the session’s lows at 117.28. Then it kept grinding higher, stalling at 118.00 as bulls took a breather and prepared an assault towards January 2017 cycle high around 118.61.

In the meantime, the US Dollar Index, a gauge of the greenback’s measurement against a basket of its rivals, fell from the 99.00 mark, down 0.28%, sits at 98.85. Meanwhile, the US 10-year T-note yield advances eleven basis points, sitting at 2.121%, as traders prepare for the US central bank first rate hike.

GBP/USD

After having started the week with a small bullish gap, GBP/USD has lost its traction and touched its weakest level since November 2020 at 1.3008 during the Asian trading hours on Monday. The pair is trading near Friday's closing level of 1.3030 in the early European session as investors remain hopeful for a de-escalation of the Russia-Ukraine conflict.

Reflecting the upbeat market mood, US stock index futures are rising between 0.7% and 0.9%. Despite the risk-positive atmosphere, the greenback is holding its ground on Monday and not allowing GBP/USD to gather bullish momentum. With the benchmark 10-year US Treasury bond yield rising 2% on the day at 2.04%, the US Dollar Index is moving sideways above 99.00.

AUD/USD

AUD/USD is opening in early Asia offered after breaking below 0.72 the figure. Markets were trading risk-off at the start of the week and AUD/USD fell from a high of 0.7193 to a fresh daily low of 0.7187. Investors eyed Russia-Ukraine peace talks, while major central bank meetings this week.

The AUD  fell at the same time that commodities retraced some of their recent gains on news from Russia-Ukraine talks. US stocks lost more ground and the S&P 500 dropped 0.74% and the Nasdaq Composite slumped around 2% while the Dow Jones Industrial Average was little changed at 32.945.24. The 10-year US Treasury yield jumped by 14 basis points to 2.142% and the Aussie yield crossed the 2.5%, printing its highest level since 2018 to 2.53%.

XAU/USD

As US yields rally to their highest levels since July 2019, the gold price is weakening in early afternoon US trade and is losing some 1.85% at the time of writing. XAU/USD has fallen from a high of $1.988.52 to a low of $1.949.74 so far, despite a risk-off theme at the start of the week. 

The focus remains on the Russian invasion of Ukraine. There are reports that the US has told allies that China signalled its willingness to provide military assistance to Russia, according to officials familiar with American diplomatic cables on the exchange. Meanwhile, President Volodymyr Zelensky said his representatives were discussing a possible meeting with Russian leader Vladimir Putin, as negotiators noted some positive movement on issues of substance in recent days.

WTI

The US crude oil benchmark plunged on a “somewhat” improvement on risk sentiment and dropped back under the $100 mark for the first time in two weeks. Russian-Ukraine officials reported progress in discussions, confirmed by US Deputy Secretary of State Sherman, commenting that Russia has shown signs of willingness to engage in “substantive negotiations.” At the time of writing, Western Texas Intermediate (WTI) is trading at $102.39.

The market sentiment is mixed, as European stock indices ended the session in the green, contrarily to the US ones, when the only gainer is the Dow Jones Industrial up 0.54%, at 33.123.14. Additionally to the geopolitical jitters in Eastern Europe, an outbreak in Covid-19 cases in China, in Shanghai and Shenzhen, weighed on the black gold prices, as they are isolated into lockdown, according to China’s zero-tolerance stance.

#XOM

Exxon Mobil Corporation XOM is looking to divest its Bakken shale assets in North Dakota as part of the plans to reduce expenses amid the surging oil prices, per a report by Bloomberg. In 2021, ExxonMobil generated cash proceeds of $3 billion through asset divestments. XOM is expected to receive $5 billion by divesting the Bakken assets.

In 2018, the company established a goal to raise $15 billion from asset divestments, and put various U.S. and international assets on the market. The company has been on a major cost-cutting drive after suffering a historic $22.4 billion loss in 2020. By 2023, it expects to reduce annual costs by $9 billion in an attempt to quickly pay down debt. XOM stock lower 3.04 (-3.58%) closed at 81.88 on Monday.

#FB

Meta Platforms FB owned social media service, Instagram, is set to be effectively banned in Russia from today. Russian authorities took this decision to counter Meta’s decision to allow violent posts against Russian forces. Instagram’s ban in Russia will affect nearly 80 million users.

Per a recent statement by Meta’s chief financial officer, Dave Wehner, the crackdown by Russia on Instagram and Facebook would cost the company nearly $2 billion in sales. Russia accounts for 1.5% of Meta’s advertising dollars, thus affecting the company’s top line in fiscal 2022. In the last trading session, Meta’s shares have closed at 3.89% down on Mar 11, 2022. In the year-to-date period, Meta’s shares have fallen 44.3%, underperforming the Zacks Internet – Software industry’s fall of 39.6% and the Zacks Computer and Technology sector’s fall of 18.9%. FB stock lower 0.98 (-0.52%) closed at 186.63 on Monday.

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