In the absence of the risk of a Europe-specific energy crisis and recession things are looking quite rosy for the European single currency, according to economists at Commerzbank. However, sanctions against Russia are set to cap the EUR/USD pair below the 1.11 level.
Euro between sanction risks and ECB about turn.“More sanctions mean that the risk of energy disruptions in Europe rises. Of course, things look fundamentally different for the US side. An economy that can largely provide its own energy is much more robust.”
“The risk of significant euro weakness increases. That is why it is so difficult at present for EUR/USD to establish itself in the area above 1.11.”
“The EUR-positive argument is a qualitative one: the fact that the ECB ends its ultra-expansionary monetary policy at all.”
“If the ECB ends the period of permanently negative interest rates in the next few months, then at least there is a chance that it will pursue a monetary policy that supports the euro.”
EUR/USD hovers around 1.1050 amid firmer yields.EUR/USD is trading around 1.1050, as bulls are struggling for an upside daily extension amid the extended rally in the US Treasury yields. The market mood remains cautiously optimistic on some progress on the Russia-Ukraine peace talks while the US dollar steadies at higher levels.
GBP/USD holds higher ground above 1.3100 ahead of BOE’s Bailey.GBP/USD is reversing a brief dip below 1.3100 ahead of a slew of speeches from the Bank of England (BOE) officials later this Monday. The upside, however, appears limited, as the Treasury yields advance further amid hawkish Fed’s outlook, which could help revive the US dollar’s demand.
Gold turns bearish with technicals amid bond rout, 50-DMA back in sight.Gold edged lower during the early part of the trading on Monday, though the downtick lacked any follow-through selling. The XAU/USD quickly reversed an intraday dip to the four-day low and was last seen trading just above $1,920.