Euro drifting on lack of data

It has been a quiet start to the week, as the euro trades at 1.1040 in the North American session. There are no tier-1 events out of the eurozone or the US, so we can expect limited movement from EUR/USD for the remainder of the day.

The US dollar had a rough week, as it retreated against the majors, with the exception of the Japanese yen. EUR/USD climbed 1.28% last week and broke above the symbolic 1.10 line. The euro remains sensitive to developments in the Ukraine war. Over the weekend, the Turkish foreign minister said that Russia and Ukraine are making progress towards an agreement to end the fighting, and the markets continue to price in an agreement, although there have not been any signal from the warring sides that a deal is near.

Russian President Putin says that bombs will keep falling on Ukraine even during negotiations, so we can expect the humanitarian disaster to get even worse. If there is an unexpected breakthrough and a ceasefire is reached, risk appetite will jump and the euro would likely rise sharply. There have also been discussions about a European oil embargo of Russian oil, but this will be very difficult to implement, given the significant dependency that Western Europe has on energy supplies from Russia.

Bundesbank says Ukraine war hurting German economy

The German central bank’s published its latest assessment of the German economy on Monday, and the Bank didn’t paint a pretty picture. The report said that the Ukraine conflict is having a negative effect and the Q2 recovery is expected to be much weaker than expected. Higher energy prices are expected to dampen consumer consumption and industrial output, and inflation is rising due to higher prices for energy and wheat. As Germany is the bellwether of the eurozone, the report is certainly grim news for the bloc.


EUR/USD Technical

  • 1.0923 is the first line of support, followed by 1.0794
  • There is resistance at 1.1159 and 1.1266

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.