- EUR/USD is hovering just above 1.1300 as traders eye tensions between Russia, Ukraine and NATO and recent dovish statements from the ECB.
- A break below 1.1300 could generate bearish momentum towards 1.1200-1.1250, says ING.
- In addition to geopolitics, there is plenty of economic data and plenty of central bankers speaking for EUR/USD traders to watch this week.
The EUR/USD trades just north of the 1.1300 level as ongoing concerns about the Eurozone’s economic vulnerability to a Russia-Ukraine war, plus recent more dovish comments from ECB politicians, weigh on the Euro. EUR/USD fell below 1.1400 last week as the US press, citing US intelligence, reported that a Russian military incursion into Ukraine could take place as soon as this week, raising fears about the eurozone’s reliance on Russian gas imports. At current levels just below 1.1320, the pair is about 1.5% below last week’s highs and roughly back in line with its levels prior to the ECB meeting on Feb 3rd.
According to ING, the “break below 1.1400 in EUR/USD last week probably indicates that the recent attempt by members of the European Central Bank to cool off excessive aggressive speculation has… hit the euro.” “Another break below 1.1300,” the bank continued, “could generate further bearish momentum in EUR/USD which could extend into the 1.1200-1.1250 area if markets reduce bets on summer adjustment for part of the ECB”. Indeed, the Irish Central Bank chief strongly opposed the idea of a summer tightening on Sunday, calling money market prices for a June rate hike “unrealistic”.
While Russia/Ukraine/NATO geopolitical tensions will likely remain the dominant driver for the pair this week, there is also plenty of central bank talk and data from the US and Eurozone to watch out for. Lagarde will speak at 16:15 GMT on Monday, ahead of the release of the German ZEW survey for February and the second estimate of euro zone GDP growth for the fourth quarter of 2021 on Tuesday. Also Tuesday, US January producer price inflation figures and the February New York Fed manufacturing survey are scheduled to be released, ahead of the US January retail sales report and the Minutes of the last Fed meeting on Wednesday.
On Thursday, the ECB will release its Economic Bulletin, ahead of the release of the Philadelphia Fed manufacturing survey for February and the week’s initial US jobless claims report. There will also be comments from James Bullard and Loretta Mester, though the Fed’s biggest speech will be on Friday, with “core” Fed policymakers Christopher Waller, New York Fed President John Williams and Fed Vice President Lael Brainard , everyone will give statements.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
