EUR/USD regains 1.1200 on cautious optimism over Russia-Ukraine crisis
|- EUR/USD pares the biggest daily loss in three months, grinds near intraday top of late.
- Hopes that US could broker ceasefire deal through NATO triggered the latest rebound even as Russia bombards Ukraine.
- US President Biden will have a virtual meeting with global allies NATO members.
- ECB President Lagarde’s speech, US/Eurozone data may also entertain traders.
EUR/USD consolidates the previous day’s losses around 1.1220, up 0.15% intraday as markets expect a halt in the Russia-Ukraine war despite witnessing the latest bombarding of Moscow over Kyiv. In doing so, the quote seesaws around daily highs during the early Friday morning in Europe.
The latest optimism could be linked to US President Joe Biden’s readiness to gather global leaders, virtually, to discuss the security situation in and around Ukraine, per the White House. Also, Thursday’s comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender,” add to the market’s cautious optimism. On the same line were chatters that Ukraine President Zelenskyy said they need to discuss ceasefire with Russia.
It’s worth noting, however, that Ukraine reported six explosions in Kyiv and confirmed losing command over Chernobyl nuclear plant. The news of the Ukrainian border post in the Zaporizhzhya region hit by missile strike also weighs on sentiment and challenge EUR/USD bulls.
Amid these plays, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day. However, S&P 500 Futures drop 0.30% and the US Treasury yields remain pressured around 1.95%, which in turn triggered the US Dollar Index (DXY) pullback from a 20-month high by the press time.
It should be noted that the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added strength to the US dollar on Thursday.
Fedspeak could also be considered favoring the DXY as Atlanta Fed Raphael Bostic and Richmond Fed President Thomas Barkin join Federal Reserve (Fed) Governor Christopher Waller to favor faster rate-hikes.
Looking forward, German GDP and Eurozone Consumer Confidence will initially entertain EUR/USD traders ahead of the Fed’s key inflation gauge, namely Core PCE Price Index, as well as Durable Goods Orders, for January. Additionally, comments from European Central Bank (ECB) President Christine Lagarde and Fedspeak will also be important for the pair traders to watch. Above all, geopolitical updates concerning Russia and Ukraine will provide clear direction.
Read: EUR/USD Forecast: Russia-Ukraine war put the world on its toes
Technical analysis
EUR/USD pair’s ability to stay beyond three-month-old horizontal support, around 1.1185-75, directs the quote towards February’s low near 1.1280 but a two-week-long descending resistance line, near 1.1330, will challenge the bulls afterward.
Meanwhile, a downside break of the 1.1175 will aim for the previous month’s low of 1.1121 and the latest low of 1.1106 ahead of targeting the 61.8% Fibonacci Expansion (FE) of the EUR/USD pair’s moves between September 2021 and February 2022, near the 1.1000 psychological magnet.
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