American equities declined on Monday as the west continued to focus on diplomacy to address the crisis in Ukraine. Today, a week after Vladimir Putin met with Emmanuel Macron, he will meet with Olaf Scholz of Germany. Putin has demanded that Nato members create securities guarantees that Ukraine will not become a member of the organization. Scholz is expected to ask Putin to de-escalate the situation at the Ukraine border and embrace diplomacy. According to the FT, he will also tell Putin about how severe the sanctions from western countries will be if he invades. The Dow Jones declined by more than 290 points.
The British pound declined slightly ahead of important economic data from the UK. the Office of National Statistics (ONS) will publish the latest jobs numbers in the morning session today. Analysts expect the data to show that the country’s unemployment rate declined to 4.0% in December while the economy created thousands of jobs. These numbers will come a day ahead of the latest inflation data from the UK. The data will provide more details about the performance of the UK economy and give a snapshot about what to expect from the Bank of England (BOE).
The euro continued its bearish trend after Christine Lagarde reaffirmed that any rate hike regime will be gradual. The speech came ahead of the latest Eurozone GDP data scheduled for later today. Analysts expect the numbers to show that the country’s economy expanded by 4.6% in the fourth quarter and by 0.3% on a QoQ basis. Eurostat will also publish the latest employment and trade balance numbers. Other important data to watch will be the latest German economic sentiment.
EURUSD
The EURUSD pair declined to a low of 1.1290, which was the lowest level since February 3rd. The pair dropped to the 50% Fibonacci retracement level. It also crashed below the 25-day and 50-day moving averages. At the same time, the MACD has moved below the neutral level while the Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, the pair will likely keep falling as bears target the key support at 1.1250.
GBPUSD
The GBPUSD pair declined ahead of the latest UK GDP data. The pair is trading at 1.3516, which is substantially below the year-to-date high of 1.3570. On the four-hour chart, the pair remains below the 25-day moving average and the 38.2% Fibonacci retracement level. It has also moved below the first support of the Andrews pitchfork tool. Therefore, the path of the least resistance for the pair is to the downside.
XAUUSD
The XAUUSD pair continued its bullish trend as investors moved to safe haven assets. The pair rose to 1,877, which is the highest level since November last year. It also passed the key resistance level at 1,853, which was at the highest point on January 28th. The pair also moved above the 25-day and 50-day moving averages. Therefore, the pair will likely keep rising to the next key resistance at 1,877.
