EUR/USD Rises Amidst Upbeat Mood Around Ukraine

  • EURUSD
    (${instrument.percentChange}%)

Ukraine News

Sentiment is upbeat today, as hopes of a diplomatic solution to the Ukrainian dispute got a boost, from the prospect of a meeting between US and Russian Presidents this week.

The White House announced on Sunday, that US President Biden accepted "in principle", a meeting with Russian President Putin, but that will occur only "if an invasion hasn't happened".[1]

This summit is expected to take place after the scheduled meeting between the Foreign Ministers of the two countries on Thursday, which was announced last week. [2]

The situation however, remains tense and many western countries continue to believe that a Russian invasion in Ukraine is imminent. The aforementioned White House announcement, warned that "Russia appears to be continuing preparations for a full-scale assault on Ukraine very soon".

Russia denies such plans, with Russian Ambassador to the US, Anatoly Antonov, saying that "There is no invasion and there is no such plans", speaking on CBS Face the Nation yesterday. He also stressed that "Russian troops are on sovereign Russian territory". [3]

Fed Hikes

The US Federal Reserve has pointed to lift-off in its March meeting and the conversation rotates, not only around the number of hikes, but also their size. Some members are more hawkish, such as Mr Bullard, who reiterated calls for 100 basis points by July 1 last week on CNN [4], while others are more cautious.

Why Trade with FXCM

Commission free with fast, efficient execution.

This creates some confusion around the size of the first move and markets have moderated previous more aggressive pricing, after last Wednesday's somewhat dovish minutes. CME's FedWatch Tool [5], now projects a 25 basis point rate increase next month, with 82.8% probability at the time of writing, from a 50 bps move a few days back. It also project up to six 25 bps hikes within the year, from seven, up until recently.

The European central bank on the other hand is behind its US counterpart in the tightening process, but Ms Lagarde had recently not ruled out a hike in 2022 – a hawkish shift from prior remarks. [6].

The Pandemic Emergency Purchase Programme (PEPP) will end at the end of March, with the Asset Purchase Programme (APP) to continue, expected to be €20 billion/month from October. Rates hikes will begin after purchases end.

However, we have recently seen some commentary for earlier conclusion of the APP, such as from Mr Kazimir, who advocated for a summer conclusion, speaking on Bloomberg last week [7].

EUR/USD

The pair starts the week on the front foot due to broader market optimism around Ukraine and "tame" market pricing around the Fed, gaining around 0.5% today.

The common currency returns above its EMA100 and this gives it the opportunity to retake the 1.1400 area, but this year's highs (1.1494) are probably distant at this stage.

On the other hand, the move seems a bit overextended and we could see downward pressure, although a catalyst would likely be needed for new February lows and a breach of the broader 1.1279-59.

Caution is warranted as markets continue to monitor news around Ukraine and in regards to liquidity/conditions, since Wall Street will be closed today due to a holiday.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 21 Feb 2022 https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/20/statement-from-press-secretary-jen-psaki-5/

2

Retrieved 21 Feb 2022 https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/02/18/remarks-by-president-biden-providing-an-update-on-russia-and-ukraine-2/

3

Retrieved 21 Feb 2022 https://www.cbsnews.com/video/full-interview-russian-ambassador-to-the-u-s-anatoly-antonov-on-face-the-nation/#x

4

Retrieved 21 Feb 2022 https://www.stlouisfed.org/from-the-president/video-appearances/2022/bullard-cnn-monetary-policy

5

Retrieved 21 Feb 2022 https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html#

6

Retrieved 21 Feb 2022 https://www.ecb.europa.eu/press/pressconf/2022/html/ecb.is220203~ca7001dec0.en.html

7

Retrieved 03 Jul 2022 https://twitter.com/KazimirPeter/status/1494640925913628673

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}