Two trades to watch: EUR/JPY, AUD/USD

EUR/JPY drops to 2022 lows, EZ retail sales due

EUR/USD is falling for a second straight session and is on track to lose 2.35% so far this week as the Russian attacks on Ukraine intensify, driving safe-haven demand.

Russian shelling started a fire at a nuclear plant in Ukraine. While the latest reports say that radiation levels are unchanged, the move by Russia, intentional or not, has hit risk sentiment and the EUR hard while boosting demand for the safe-haven Japanese yen.

Data will play second fiddle to risk sentiment. In the European session, EU retail sales are expected to jump 1.3% MoM in January after dropping 3% in December, as Omicron restrictions eased.

Where next for EUR/JPY?

After rising to 133.14 on February 10, the price formed a series of lower highs and lower lows. The declines extended below the 50 & 100 sma.

The pair has taken out a key support of around 127.40, which, combined with the bearish RSI, suggests that there could be more downside on the cards.

Support can be seen at 127.00 psychological level ahead of 126.40 a multi-month falling trendline support.

On the upside, resistance can be seen at 128.00, a level which has offered both support and resistance on several occasions over the past few months, ahead of 128.30, the January 26 low.

 

AUD/USD rises as commodity prices gain, NFP next

AUDUSD is trading higher for a third straight session and is on track to book gains of 1.7% across the week.

The Aussie dollar, often considered a riskier currency, would usually fall when risk sentiment drops and war breaks out. However, AUD has rallied this week as commodity prices surge.

As a commodity currency, the aussie benefit from rising commodity prices, particularly of the metals, which it exports.

Australian retail sales rebounded in January rising 1.8% after dropping -4.4% in December.

Looking ahead, US non-farm payrolls are set to show another impressive month with 407k jobs created, after 467k in January. Unemployment is forecast to tick lower to 3.9% and wages rise to 0.5%

Jerome Powell has as good as confirmed a 25-basis point rate hike this month making the NFP slightly less crucial than usual.

Where next for AUD/USD?

AUDUSD has extended its rebound from the late January low of 0.6970, rising above its 50 & 100 sma, and taking out resistance at 0.7310, the previous 2022 high. The RSI supports further gains whilst it remains out of the overbought territory.

Resistance can be seen at 0.7365 the November 15 high ahead of 0.7430 the November 8 high.

On the downside, support can be seen at 0.7310 the previous 2022 high, ahead of 0.7250 the February 11 high.