- EUR/USD crushed on Ukraine spillover to the eurozone economy.
- Traders are now waiting to see if a second round of negotiations will take place this week.
EUR/USD is trading at 1.1101 and down 0.15% at the time of writing, sliding from a 1.1121 high to a 1.1093 low on the day so far. The single currency is weighed towards a 21-month low due to eurozone economic risks associated with Russia's invasion of Ukraine.
The price of the euro, however, does not entirely represent the mood elsewhere amongst forex, stocks and commodities. US stocks rose on Wednesday and Asia is riding the coattails after Fed's Powell stated that the US economy is strong enough to sustain rate hikes while also promising to be cautious in removing support.
Federal Reserve Chair Jerome Powell said on Wednesday the central bank would begin "carefully" raising interest rates this month, but was ready to move more aggressively if needed, in line with the market's pricing. So this was traded as a relief in markets that are desperate for some positive news.
Meanwhile, the Fed's James Bullard urged for a "quick withdrawal of policy accommodation," while Fed's Charles Evans said monetary policy is currently "wrong-footed" and has to be moved upwards toward neutrality. ''We are going to get going," on raising rates over the next several meetings, going carefully at first, but raising them faster if the inflation outlook worsens, Evans told the Lake Forest-Lake Bluff Rotary Club Foundation.
In the commodity space, the war in Ukraine sent oil and resource prices soaring to blue skies which is raising inflation fears on a global scale. Eurozone inflation indeed hit a record high at 5.8% last month data showed on Wednesday. As for the Ukraine crisis, the UN General Assembly condemned Russia's incursion, highlighting Moscow's growing isolation on the international scene. The price of oil is set for higher levels now that the US authorities consider imposing tariffs on Russian commodities. Today, WTI CFDs have reached a fresh high of $113.66.
Meanwhile, the Russian military's march continued and there are reports that UK intelligence stated five Ukrainian cities are now surrounded by the Russian military. The Kremlin has announced that the city of Kherson on the Black Sea had been taken. Traders are now waiting to see if a second round of negotiations will take place this week.