Continuous selling pressure surrounding the USD in recent times, alongside the risk complexity in general, gathered extra momentum and pulled down the EUR/USD pair to under the 1.1200 benchmark since Thursday.
EUR/USD price chart. Source TradingView
EUR/USD Becomes Weaker After Russia Invades Ukraine, Traders Seek Safe Haven
The EUR/USD pair added to the number of pullbacks experienced in the course of the week while the Russian invasion of Ukraine was still anticipated, and the latter part of the week following the invasion increased the panic demand for the US dollar. It was a response to the general increase in flowing income for the safe-haven market.
Due to that, the US dollar gained extra stream in its safe-haven status after Russia began its invasion early on Thursday morning, thus putting risk complexity under heavy downward pressure and boosting the demand for perceived safer currency assets like the Japanese yen, Swiss franc, bonds, and the US dollar.
Financial markets on both sides of the Atlantic displayed new buying interests pressed down the US ten-year bond yields to under 1.90% zones and equally pulled Germany’s ten-year bond yields under 0.15%.
There are currently no publications in the US domestic calendar whereby another visitation of the Quarter-4 GDP numbers, therefore the Unemployment Claims and New Home Sales are due in the United States.
What to Expect from the EUR
EUR/USD keeps watching out for the geopolitical situation and risk sentiment trends to influence short-term decisions. The eventual deterioration in the conflict in Eastern Europe is speculated to keep the pair under some pressure as the risk-off sentiment persists.
While that goes on, the degree of strength in the pair should be underpinned with speculations of a possible interest rate increase by the European Central Bank may be sooner than many have expected, increased German yields, struggling against inflation, a fair pace of economic activities, and encouraging results from major stats in the region. The main threat to this is from the US Federal Reserve and the expected tight monetary policy to fight inflation.
Major Events in the Eurozone this Week:
These include the Euro Group Meeting;
The release of Germany’s Quarte-4 GDP;
The Economic and Monetary Union Final Consumer Confidence report;
ECB’s Lagarde speech.
Eminent Topics Still on the Fore:
Speculations over the ECB’s monetary policy for later this year. Economic recovery and post-pandemic plans for the Eurozone. The French Presidential election is slated for April. The geopolitical conflict in Eastern Europe.