EU INDICES SLIP AS RUSSIAN TENSIONS RISE

European equities dropped sharply on Monday as investors continued to worry about the tensions between Western countries and Russia. In Germany, the DAX declined by more than 3% while in France, CAC 40 dropped by 3.20%. The same trend happened in the UK and in US, where the Dow Jones retreated by less than 1%. Olaf Scholz, the new German chancellor will become the second European leader to talk with Putin about Ukraine. His trip will come a day after Jake Sullivan warned that an attack would happen ‘any day now.’ An attack and the following sanctions will add to more inflationary pressures because of the important role that Russia plays in the energy industry.

Crude oil prices held steady near its seven-year high as investors continued to focus on demand and supply. Demand is expected to keep rising in the coming months as the world reopens. Today, activity in most cities has moved to normal while more countries have eased their travel restrictions. At the same time, there are worries about supply. For one, several OPEC members have struggled to ramp production. There are worries that Russia will be cut-off if it invades Ukraine. Also, it is unclear whether the US and Iran will reach a nuclear deal in the coming months.

The Canadian dollar rose slightly against the US dollar after the Canadian police managed to reopen its border with the US. The border had been blocked in the past few days by truck-drivers who have been protesting the government’s vaccine mandates. The currency also rose in response to the rising oil prices. Canada is a leading producer of oil that sells millions of barrels every day. The top events to watch during the American session will be earnings from companies like Avis Budget, Weber, and Advance Auto Parts.

GER30

The DAX index declined sharply on Monday ahead of the upcoming meeting between Vladimir Putin and Olaf Scholz regarding Ukraine. The index slipped to an intraday low of €14,830. On the four-hour chart, the index has moved below the 25-day and 50-day moving averages. It also tested the key support €14,830, which was the lowest level on January 24th. Therefore, there is a likelihood that the index will bounce back as these tensions fade.

XNGUSD

The XNGUSD pair rose slightly as investors watched the crisis on Ukraine. Natural gas is trading at $4.06, which is slightly above last week’s low of 3.85. On the four-hour chart, the pair is slightly below the 61.8% Fibonacci retracement level. The MACD has also formed a bullish divergence pattern. The pair has also found some resistance at the 25-day moving average. Therefore, the pair will likely break out lower.

EURUSD

The EURUSD pair declined sharply as investors moved to the safety of the US dollar. It fell to a low of 1.1300, which was the lowest level since February 3rd. It moved to the 50% Fibonacci retracement level. Also, the pair is still below the 25-day moving average while the RSI has continued forming a bearish divergence pattern. Therefore, the pair will likely keep falling in the near term.