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Escalating Tensions in Israel: How Geopolitical Unrest May Drive Investors Toward Safe-Haven Assets

With rising geopolitical risk stemming from the Israel conflict, how might this influence the demand for safe-haven assets like Gold and the US Dollar in the financial markets, considering the current strength and overbought conditions of the US Dollar?

Will the war and the growing demand for the US Dollar help sustain its current momentum?

Read below what our desk thinks, and the important levels to watch this week.

This market brief is an overview of the week ahead and some of the events we see as being important to the markets.

Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes. For up-to-the-minute market analysis see our live trading room.

INDICES

AUSTRALASIA

ASX – 6966 (-57 or -0.81%)

The ASX is trading in its lower support range formed over the past 12 months.

VOLATILITY ALERTS:

Tues 10:00 – AUD Consumer Confidence

Tues 11:30 – AUD Business Confidence

For a move higher, we would like to see the ASX close above 6991. Should this occur, a move above 7093 should be expected, and if momentum is strong, we cannot rule out moves to 7112 and 7196.
Failure to close above 6991 means a potential move into 6854. 6775 is the next support level down if 6717 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6646.

EUROPE

DAX (30) – 15175 (-398 or -2.5%)

The DAX is down 2% in the past week.

VOLATILITY ALERTS:

Wed 17:00 – EUR CPI

For the DAX to move higher, we would like to see it close above 15181. Should this occur, then 15243 is the next level ahead. If upside momentum is strong, then 15396 and 15600 cannot be ruled out. 

To the downside, should we not see it hold above 15181, we will look for a move into support at 15087. A strong break and close below this handle and 14974 is the next level down. If downside pressure mounts, then 14672 cannot be ruled out.

S&P 500 – 4277 (-46 or -1.06%)

The SPX is down 1% this week and has created a lower low formation.

VOLATILITY ALERTS:

Wed 23:30 – USD PPI

Thur 23:30 – USD CPI

Thur 23:30 – USD Jobless Claims

Thur 23:30 – USD Inflation Rate

For a move higher, we would like to see the S&P hold above 4274. Should this occur, we will look for a move through 4339. And if momentum is strong, we cannot rule out moves to 4412 and 4480.

If we cannot hold above 4245, we could see this market move down into 4144 A break of this level, however, may result in a quick move down to 4118. And if momentum to the downside remains strong, we may see a fast move back down to 4005.

FOREX

AUD/USD – 0.6361 (-81 or -1.26%)

The AUDUSD has closed the week down 1% and started with an opening gap of -20 points.

VOLATILITY ALERTS:

Tues 10:00 – AUD Consumer Confidence

Tues 11:30 – AUD Business Confidence

Wed 23:30 – USD PPI

Thur 23:30 – USD CPI

Thur 23:30 – USD Jobless Claims

Thur 23:30 – USD Inflation Rate

For a move higher this week, we would like to see it hold above 0.6363. We will then be targeting a move through 0.6377. If we see a strong break and close above this level, then we can’t rule out a move to 0.6426. Should momentum to the upside be really strong, then 0.6457 could be targeted.

If this market cannot hold above 0.6363we could see a move down to 0.6327. A strong break of this level may result in a move into 0.6274 however, any weakness below this level could see a sharp drop into 0.6214.

EUR/USD – 1.0566 (-83 or -0.78%)

The EURUSD has continued to move lower keeping to its downtrend for over 60 days.

VOLATILITY ALERTS:

Wed 17:00 – EUR CPI

Wed 23:30 – USD PPI

Thur 23:30 – USD CPI

Thur 23:30 – USD Jobless Claims

Thur 23:30 – USD Inflation Rate

For a move higher, we would like to see the Euro close above 1.0564. Should this occur, we should see a move above 1.0579. A break of this level could see this market rally further to 1.0754 and 1.0773.

If the EURO cannot close above 1.0564, we will see a move into 1.0519. A strong break of this level may result in a move into 1.0411, however, any weakness below this level could see a move into 1.0369.

GBP/USD – 1.2217 (-29 or -0.24%)

GBPUSD ended the week regaining most of its earlier losses, closing down 0.24%

VOLATILITY ALERTS:

Tues 10:00 – GBP Retail Sales

Wed 23:30 – USD PPI

Thur 23:30 – USD CPI

Thur 23:30 – USD Jobless Claims

Thur 23:30 – USD Inflation Rate

For a move to the upside, we would like to see Cable hold above 1.2218 before a break higher into 1.2243. If this market can see a strong close above this level, we may then see a strong pushback into 1.2346. If upside momentum is really strong, then a move back into 1.2433 can’t be ruled out.

Should we fail to hold above 1.2218, we will look for a move down to 1.2176. A break below this level, however, could see Cable further depreciate to 1.2129 by the week’s end. And if momentum is very weak, we cannot rule out a move to 1.2000.

USD/JPY – 148.35 (+82 or +0.55%)

The USDJPY closed slightly higher this week.

VOLATILITY ALERTS:

Wed 23:30 – USD PPI

Thur 23:30 – USD CPI

Thur 23:30 – USD Jobless Claims

Thur 23:30 – USD Inflation Rate

For a move to the upside, we must now see this market close above 149.15. Should this occur, we will look for a move into 150.133, and if the upside momentum is strong, we could see a move higher into 151.00 and potentially 152.00.

If we cannot close above 149.15, we could see a move back to test 148.92 before a pause to the downside. A break below this level may result in a sharp move lower into 148.06, and any further breaks to the downside may see a bigger move into 147.59.

COMMODITIES

GOLD – 1847 (-77 or -4%)

GOLD dropped more than 4% before finding a support level.

For a move higher, we need to see this market close above 1847. Should this occur we could see a move into 1856; and any break of this level could see a stronger move into 1866. If momentum is strong, then 1882 cannot be ruled out.

If Gold cannot close above 1847, we can see a move down to 1839 A break below this level could see a move lower into 1815 and if momentum is very strong to the downside, we could see a move to 1788.

CRYPTOS

BITCOIN – 27922 (+1635 or +6.22%)

Bitcoin is up over 6% this past week, will the momentum continue?

For a move higher, we must now see this market close above 28000. Should this occur, we could see a move into 30000 before retesting 31000. If the upside momentum is really strong, then we can’t rule out 33000.

Failure to close above 28000 could see a move into 25000. If selling pressure takes control, then we could see a move down to 23000. A close below this level and 22000 can’t be ruled out. 20000 is the more psychological handle below that.

DISCLAIMER

The views represented on this website do not contain (and should not be construed as containing) financial advice, recommendations, opinions in relation to acquiring, hold or disposing of a financial product of any kind, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Trade View accepts no responsibility for any use that may be made of these comments for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.