- EUR/USD recovered from the lows just above 1.1100 towards the 1.1200 level, but continues to trade with substantial losses on the day.
- The euro is the worst performing country in the G10 as markets assess the fallout from the latest EU and Western sanctions against Russia.
After coming close to hitting new yearly lows near the 1.1100 level on Monday’s Asian trade reopen as markets digest the weekend’s geopolitical developments, the EUR/USD has been erratic but staged a reasonable recovery. The pair is now down around 0.7% on the day trading at the 1.1200 level. Uncertainty regarding the economic impact of the latest round of EU/Western sanctions against Russia, which includes the blocking of some Russian banks from SWIFT and the freezing of a large part of CBR’s reserves, is likely to hamper rallies in the near future. term.
A consensus view emerging from recent sessions since Russia’s invasion of Ukraine has been that the ECB’s tightening, previously thought to start as early as the fourth quarter of this year, will now be substantially delayed. The eurozone economy now faces a potentially significant disruption to its energy supply, with associated higher energy costs set to hit living standards further, as well as a widespread blow to economic confidence with a war around the corner. corner. This probably explains why the euro is the top G10 currency underperforming on Monday.
One risky event to watch on Monday is talks between a Ukrainian and Russian delegation at the Ukraine-Belarus border. If the talks achieve an (unexpected) ceasefire, that could see safe haven demand fade and the euro rally towards 1.1300.
Additional technical levels
Source: Fx Street
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