Forex Today: Russia-Ukraine peace talks not enough to trigger a relief rally

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, March 1:

The positive shift witnessed in risk sentiment in the second half of the day on Monday remained short-lived with Russia ramping up its military presence in Ukraine. Investors remain cautious early Tuesday and the greenback holds its ground against its major rivals. Later in the day, inflation data from Germany and the ISM's February Manufacturing PMI from the US will be looked upon for fresh impetus. European Central Bank (ECB) president Christine Lagarde is also scheduled to deliver a speech at 1300 GMT. Additionally, the US Federal Reserve is expected to publish the opening remarks of FOMC Chairman Jerome Powell's testimony on Wednesday.

Following a long meeting on Monday, delegations from Russia and Ukraine have agreed to meet again for the second round of "peace talks," reviving hopes for a diplomatic solution to the crisis. Nevertheless, NBC News reported that US intelligence agencies have determined that Russian President Putin could "double down on violence" as he was frustrated with his military struggles in Ukraine. Other headlines on the war showed that a huge military convoy was moving toward Kyiv and Russia was planning to choke off supply routes to the capital city.

US stocks futures indexes trade flat in the early European session on Tuesday and the benchmark 10-year US Treasury bond yield is up more than 1% at 1.86%. The US Dollar Index is posting small daily gains but stays below 97.00.

Earlier in the day, the data from China revealed that the business activity in the manufacturing sector expanded in February after contracting in January with the Caixin Manufacturing PMI improving to 50.4 from 49.1. In the meantime, the Reserve Bank of Australia (RBA) left its policy rate unchanged at 0.1% as expected and the bank reiterated that the policy rate will not be increased until actual inflation is sustainably within the 2%-3% target range. AUD/USD is up modestly on the day at 0.7270.

EUR/USD staged a decisive rebound in the American trading hours on Monday and ended up closing the day in the positive territory at 1.1220. The pair is trading in a relatively tight range near 1.1200 early Tuesday.

GBP/USD stays relatively quiet above 1.3400 heading into the European session on Tuesday. The Bank of England will publish the Net Lending to Individuals data for January later in the day, which is likely to be ignored by market participants.

USD/JPY turned south late Monday and closed the first day of the week in the red. The pair is moving sideways around 115.00.

Gold came under heavy bearish pressure in the second half of the day on Monday as risk flows took control of markets. XAU/USD is consolidating Monday's losses, staying afloat above $1,900.

Bitcoin surged higher and gained more than 14% on Monday before steadying above $43,000 early Tuesday. Ethereum rose 11% on Monday and came within a touching distance of the critical $3,000 mark.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD eyes 100-SMA hurdle near 0.7035 as hawkish RBA counters firmer USD

AUD/USD regains positive traction on Tuesday and climbs to 0.7030 during the Asian session, reversing the previous day's corrective slide from a one-month high as hawkish RBA rate expectations continue to support the Aussie. Spot prices, however, remain below the 100-day SMA pivotal resistance amid a firmer US Dollar as traders brace for Australia’s September CPI report on Wednesday ahead of the Fed rate decision.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold sticks to intraday losses around $4,000 as USD stays firm ahead of FOMC

Gold maintains its offered tone through the first half of Tuesday’s European session, with bearish traders looking to extend the slide further below the $4,000 psychological mark amid a broadly firmer US Dollar. The precious metal, however, holds above the three-month low touched on Monday, as traders refrain from placing aggressive directional bets and opt to wait for the outcome of the two-day FOMC policy meeting on Wednesday.

Pi Network stalls as weak crypto sentiment caps recovery

Pi Network (PI) holds steady above $0.0760 at press time on Tuesday, stalling after a roughly 2% rebound the previous day. The broader market's weak sentiment and reduced trading volume weigh on the PI token. The technical outlook is bearish, with price capped below a long-term resistance trendline and weak momentum.

France tests the Euro's nerve: What the OAT spread is telling FX traders

France's 10-year borrowing premium over Germany hit its widest since the 2011 debt crisis last week. With public spending above 57% of GDP, unrest on the streets and a presidential election next spring, cuts look unlikely. If Paris cannot trim, the bill may be paid quietly through financial repression.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.