EUR/USD slumps to monthly low near 1.1200 as Russia-Ukraine war begins
|- EUR/USD prints the biggest daily fall in a month as market sentiment sours on geopolitical concerns.
- Russia formally invades Ukraine, tries to seize Kyiv airport, attacks capital.
- Hawkish comments from Fed’s Daly battles upbeat ECB speakers.
- Second reading of US Q4 GDP will decorate calendar but risk catalysts will keep the driver’s seat.
EUR/USD bears attack 1.1200, down 0.75% intraday near 1.1210 as Russian forces play their role to shake global markets, as already feared by the West. The geopolitical tussles propelled the safe-havens and oil prices during early Thursday morning in Europe.
That said, the latest update from Ukraine’s Interior Ministry confirms the media reports that Kyiv is under attack from the cruise and ballistic missiles.
Previously, North Atlantic Treaty Organization (NATO) officially confirmed Russia’s military action whereas CNN marked multiple explosions in Ukrainian cities.
In a response to Moscow’s military move, US President Joe Biden promised “further consequences” for Russia while US Senator Marco Rubio, also the Vice-Chairman of the Select Committee on Intelligence, said that Russian airborne attempts seizing control on Kyiv airport.
Amid the influx of risk-aversion, the US 10-year Treasury yields snap two-day rebound by declining around nine basis points (bps) to 1.88% whereas S&P 500 Futures drop over 2.0% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.50% intraday due to its safe-haven appeal at the latest.
It should be observed that the early-day comments from San Fransisco Fed President Mary Daly also propel the US dollar amid fears of faster Fed rate hikes. The policymaker cited 'more urgency' on rate hikes in her latest speech.
On Wednesday, The European Central Bank (ECB) governing board member Robert Holzmann said in an interview with NNZ, “it is possible for ECB to hike rates before ending bond purchases.” On the same line were comments from ECB policymaker Bostjan Vasle. However, the central bank’s board member Francois Villeroy de Galhau said Wednesday, “we will assess the more indirect consequences of Ukraine crisis on inflation and growth in March.” “We will be facts-driven,” adds ECB’s Villeroy
That said, market players will keep their eyes on the risk catalysts but the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior, will also be important to watch.
Technical analysis
A clear downside break of an upward sloping trend line from February 03, around 1.1290, directs EUR/USD towards November 2021 low of 1.1186.
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