- EUR/USD picks up bids to pare post-ECB losses, up for snapping four-week downtrend.
- ECB fastened QE tapering, revised down growth forecasts but couldn’t save Euro amid USD’s safe-haven demand.
- Ukraine-Russia negotiations failed, mixed clues over Russian military in Kyiv tested sentiment of late.
- US data may entertain traders but risk catalysts are the key.
EUR/USD takes the bids to refresh intraday high near 1.1020, up 0.35% on a day, as the US dollar pares heavy gains during Friday’s lackluster Asian session. In doing so, the major currency pair is ready for the first positive weekly closing in the last five, despite failing to welcome the European Central Bank’s (ECB) slightly hawkish move the previous day.
The US Dollar Index (DXY) snapped a two-day downtrend the previous day, recently easy around 98.50, on the announcement from Turkey that the Russia-Ukraine talks failed to mark any progress. The negotiations were previously expected to offer positive headlines as Ukraine stepped back from NATO goals and showed readiness to compromise.
Also favoring the US Dollar was the 40-year high US Consumer Price Index (CPI) print, which in turn propels the odds of the Fed’s 0.50% rate hike in March.
At home, the European Central Bank (ECB) announced plans to quickly scale back the bond-buying program with an end in sight during Q3, followed by rate lifts. However, the regional central bank’s downgrade of growth forecasts and pumping up of the inflation fears might have played a role to weigh on the Euro.
Read: ECB Analysis: EUR/USD selling opportunity? Taper helps with inflation, full war shock still to come
Elsewhere, the Russian military’s position in Kyiv raised the latest confusion and could have helped the S&P 500 Futures to print mild gains. “Satellite images taken on Thursday show a large Russian military convoy, last seen northwest of Kyiv near Antonov airport, has largely dispersed and redeployed,” said the US Satellite Company Maxar per Reuters.
Moving on, the US Michigan Consumer Sentiment Index for March, expected 61.3 versus 62.8, will be important data to watch whereas headlines on the Russia-Ukraine crisis will be crucial to not miss.
Technical analysis
Despite bouncing off the multi-month low near 1.0800, EUR/USD bulls need validation from January’s low surrounding 1.1120 to signal further upside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.