- EUR/USD tries to correct a touch higher as oil prices start to deteriorate from a 14-year high.
- Traders look to the ECB for clarification of the renewed dovish stance vs the Fed's hawkish pitch.
EUR/USD is attempting to correct higher in Asia, following the lead from yesterday's trade where the price established just ahead of 1.08 the figure where it was pinned near a 22-month low.
The was in Ukraine is a black cloud over Europe's economic outlook and the US dollar is being favoured over the single currency on the basis of the central bank divergence. The greenback rose on Monday, lifted by safe-haven flows as well, as investors weighed the effects on the global economic growth of oil prices. They were peaking at a 14-year high but are starting to come off a touch with is giving some relief to the euro in Tokyo on Tuesday,
The United States and European allies have considered banning Russian crude imports which sent Brent, the global benchmark for oil prices, to $138bbls. The dollar index (DXY), which measures the value of the greenback against six global peers, was trading as higher 99.42 overnight as well, sending the common currency down 4% on the dollar since Russia launched what it calls a "special military operation" in Ukraine.
ECB in focus
The economic implications for the eurozone due to the war will require the ECB to maintain maximum flexibility for its road to normalisation. The divergence between the ECB and Federal Reserve is favouring the US dollar which leaves 1.0800 vulnerable for the days ahead, depending on the outcome of the ECB.
Meanwhile, the week is going to be absent of Fed speakers due to the media embargo ahead of next week’s FOMC meeting, but the market is fully priced for a 25 bp hike on March 16 as the start of the tightening cycle.
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