Week at War: Russia at the Gates of Ukrainian’s Capital

Russia’s military operation in Ukraine, that started on February 24, set the world on fire. Russia invaded Ukraine, throwing Ukrainian troops back from the contact line at Donetsk and Lugansk separatist regions. Troops then went from the South to the East and then to the North, moving deeper into Ukrainian territory. Numerous eyewitness videos confirm Russian military is on the outskirts of the Ukrainian capital of Kiev and have even broken into some districts of the city.

The United States, the United Kingdom, and the European Union seem to be in no hast to implement the  “devastating” sanctions against Russia, presumably, leaving them until  the last minute when the territory of Ukraine will be completely occupied by Russia. Or, maybe, the anticipation of these sanctions may act as a boomerang and hit their economies. Nevertheless, the market sees that the logic behind the invasion of Ukraine has restricted the purchase of oil and gas from Russia – oil prices are sky-rocketing, inflation is soaring, and  more hawkish Federal Reserve (Fed) monetary actions are not very sustainable. Thus, a rebound of the U.S. stock market on Thursday when the S&P 500 broad market index closed the day 1.4% up, could be justified. However, it is hard to expect this rebound to continue, as well as a steady further decline of stocks. Technically, futures on the S&P 500 index are within the downward trend, with targets at 4100-4150 points, which have already been met. This is curbing the index from a further decline. So, a sell position opened at 4430-4450 should be partially closed at these levels. The other part of the position should be limited by a stop-loss order to secure at least a minor profit.

The oil market is in line with the “$100 per barrel” scenario. And the technical routine of this scenario is completed. Speculators are now running a free routine that may suggest some prices spikes to $105.00 per barrel of Brent crude or even to $110.00. However, traders should start thinking about the possible upcoming decline of crude prices that may start in the second half of March.

The gold market is disappointed with the sanctions against Russia after the U.S. and EU announced a rather weak list of measures in response to the Russian invasion of Ukraine. Gold prices fell from $1973 per troy ounce to $1880 and stabilised close to $1910 per ounce. In the month of March gold prices are expected to decline. So, it is hard to expect they will go over $1940 now. Anyway, investors should keep an eye on a possible strong drop in gold prices.

A wide selloff of the assets led to the strengthening of the U.S. Dollar. The EURUSD fell below bold expectations to 1.10500-1.11500. So, it is time for the Greenback to step back and for EURUSD to stabilise at the current levels.

GBPUSD has changed its trend to the downside with the target at 1.32000-1.32500 and already hit the 1.32700 level. By European midday on Friday, the pair returned above 1.33700. The next week is expected to start with a rebound towards 1.34300-1.34500 that could be used to open sell positions with the target at 1.33000-1.33500 that could be reached by the end of the next week.