Better risk appetite amid hopes for Russia/Ukraine de-escalation and hot EZ inflation have failed to lift the euro on Wednesday.EUR/USD is still trading slightly in the red on the day in the 1.1100 area, having broken key downside support.
Even though risk appetite has taken a decent turn for the better amid hopes that a second round of Russia/Ukraine talks on Wednesday might deliver some much-needed de-escalation, and despite hot Eurozone inflation figures, EUR/USD continues to struggle. The pair hit fresh annual and 22-month lows on Wednesday in the 1.1050s, and though it has subsequently managed to recover back to the 1.110 area, it continues to trade lower on the day by about 0.1%. Now that support above 1.1100 has been cleared, longer-term bears may target an eventual move back to March 2020 lows in the 1.0600s.
The morning’s upside Eurozone inflation surprise which saw the flash February estimate of HICP hit 5.8% YoY (expected 5.4%) and the core measure hit 2.7% (expected 2.3%) was acknowledged by ECB Vice President Louis de Guindos as a negative surprise. Fellow ECB policymaker Nagel warned that monetary policy must be on guard against inflation if price stability requires it. Rising inflationary pressures put the ECB in an awkward position, given some policymakers have pushed for a more dovish normalisation timeline given Ukraine uncertainty in recent days.
Ultimately, the muted reaction of European bond markets to the latest inflation data suggests that markets remain confident that the ECB will be taking a more dovish stance this year than thought two weeks ago. That much is obvious from looking at interest rate expectation sensitive German 2-year yields, which continue to trade near the -0.70% mark on Wednesday having been above -0.40% as recently as mid-February. That likely explains EUR/USD’s failure to mount a meaningful recovery.
EUR/USD stays below 1.1100 after hot EU inflation data.EUR/USD continues to trade deep in the negative territory below 1.1100 as the hot eurozone inflation data fail to help the shared currency find demand. Eurostat reported on Wednesday that the annual HICP jumped to 5.8% in February, surpassing the market expectation of 5.4%. The dollar holds its ground amid escalating Ukraine crisis, ahead of US ADP, Powell.
GBP/USD remains pressured below 1.3300 ahead of US ADP, Powell.GBP/USD remains on the back foot below 1.3300 amid a cautious mood. The US dollar holds firmer, as the sentiment remains dampened by global growth worries, courtesy of the Russia-Ukraine conflict-led surge in oil prices. Focus on US jobs, Powell’s testimony.
GBP/USD News .Gold at the mercy of Russia-Ukraine news, key levels to watch.Gold price appears choppy but within a familiar range above the $1,900 mark, as the prevalent risk sentiment remains the main market driver amid updates surrounding the Russia-Ukraine war.
GBP/USD remains pressured below 1.3300 ahead of US ADP, Powell.GBP/USD remains on the back foot below 1.3300 amid a cautious mood. The US dollar holds firmer, as the sentiment remains dampened by global growth worries, courtesy of the Russia-Ukraine conflict-led surge in oil prices. Focus on US jobs, Powell’s testimony.
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