Global markets began the trading week on a back foot as weekend news marked an explosion was heard in the center of the rebel-held city of Donetsk in eastern Ukraine. However, the sentiment quickly improved after AFP quoted French President Emanuel Macron who proposed a summit including US President Joe Biden and his Russian counterpart Vladimir Putin. The news also mentioned that both the parties have accepted the “principle” of a summit. Following the news, the White House said, “President Biden accepted in principle a meeting with President Putin following that engagement, again, if an invasion hasn’t happened.”
While portraying the risk-on mood, the S&P 500 Futures reverse the early Asian loss of around 0.50% while the US Dollar Index remains pressured around 95.80 by the press time.
In addition to the firmer sentiment, recently softer Fedspeak also weighs on the USD and helps the EUR/USD to consolidate the latest losses. That said, Federal Reserve Bank of Chicago President and FOMC member Charles Evans said on Friday that the current Fed policy had been “wrong-footed” in the face of high inflation, but may not need to become restrictive. On the other hand, New York Federal Reserve Bank President John Williams and the No. 2 official on the Fed’s policy-setting panel mentioned, “I don’t see any compelling argument to taking a big step at the beginning.”
On the same line, Bloomberg quoted European Central Bank (ECB) sources to mention, “Policymakers are edging towards a rate hike before the end of 2022 to stem more persistent than expected inflationary pressures and a stronger inflation outlook.”
Looking forward, EUR/USD traders will pay close attention to the Russia-Ukraine developments as the Biden-Putin summit may de-escalate market fears of a war between Moscow and Kyiv. The meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov is also important for fresh impulse.
On an intraday basis, preliminary readings of February month’s PMI figures for Germany and the Eurozone will be crucial. Also important will be a speech from Fed Governor Michelle W. “Miki” Bowman”.
Euro could target 1.1400 if risk-on mood stays intact
“Later in the session, IHS Markit will release the preliminary February Manufacturing and Services PMI report for the euro area and Germany. The US markets will be closed in observance of Presidents Day, suggesting that geopolitical headlines will continue to impact EUR/USD’s action.”
EUR/USD Long (Buy)
Enter at: 1.13800