Developments around the war in Ukraine will remain the main driver of euro price action

• Investors worried about the impact of conflict in Ukraine on the euro zone's economic prospects
• Data yesterday showed U.S. private employers hired more workers than expected in February
• The Canadian currency extended gains after the Bank of Canada on Wednesday raised interest rates

The dollar edged higher against the euro on Wednesday, as investors worried about the impact of an escalating conflict in Ukraine on the euro zone's economic prospects, while commodity-linked currencies strengthened. 

The Russian rouble extended its recent slide to hit record lows in Moscow trade as stinging Western sanctions over Moscow's invasion of Ukraine pummeled Russia's financial system. Developments around the war in Ukraine will remain the main driver of euro price action for the session.

 A continued escalation of conflict with no clear off-ramps for Russia is pulling the euro toward a test of 1.10 in the coming days. The euro was 0.3% lower against the dollar, after slipping to a fresh 21-month low of 1.1059, earlier in the session. 

Economic Calendar

We believe investors should underweight the euro area in both the currency and the equity space given its vulnerability to any further escalation. Meanwhile, the U.S. Federal Reserve will move forward with plans to raise interest rates this month to try to tame inflation, even as the outbreak of war in Ukraine has made the outlook "highly uncertain", Fed Chair Jerome Powell said on Wednesday. Judging from just his testimony... it's pretty much in line with our view that the Federal Reserve is going to hike rates at the next meeting. 

Data on Wednesday showed U.S. private employers hired more workers than expected in February and data for the prior month was revised sharply higher as the labor market recovery gathers steam. Commodity-linked currencies, including the Canadian, Australian, and New Zealand currencies were firmer as investors expect to benefit from higher commodity prices.

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Euro

The single currency was pinned near a 21-month low today by worries that Russia's invasion of Ukraine will hurt European growth, while commodity currencies hit multi-week highs as export prices surged. On a corporate level there is web of complex relationships between the EU and Russian firms, particularly in the energy sector. Overall, the EUR/USD traded with a low of 1.1140 and a high of 1.1245 before closing the day around 1.1216 in the New York session.

Yen

The Japanese Yen gained as investors worried about the impact of an escalating conflict in Ukraine, while commodity-linked currencies strengthened. Meanwhile, the U.S Federal Reserve will move forward with plans to raise interest rates this month to try to tame inflation, even as the outbreak of war in Ukraine has made the outlook highly uncertain Overall, the USD/JPY traded with a low of 114.84 and a high of 115.72 before closing the day around 114.98 in the U.S session.

British Pound

The British Pound rose against a weakening euro yesterday, with investors focusing on market bets on UK and eurozone rate hikes amid concerns about the economic impact of the war in Ukraine. The pound edged higher also versus a rising dollar while investors continued to rush into safe-haven assets. Overall, the GBP/USD traded with a low of 1.3326 and a high of 1.3430 before closing the day at 1.3416 in the New York session.

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Canadian Dollar

The Canadian Dollar rose yesterday against the greenback and all the other G10 currencies, as the Bank of Canada hiked interest rates for the first time since October 2018 despite recent financial market volatility due to the crisis in Ukraine. Canada's central bank hiked its key interest rate by 25 basis points to 0.50% as expected to help fight inflation. Overall, USD/CAD traded with a low of 1.2657 and a high of 1.2807 before closing the day at 1.2672 in the New York session.

Australian Dollar

The Australian Dollar sped to a four-year high on the euro yesterday as monster gains in commodity prices looked set to shower exporters in cash, and Europe desperately sought replacements for Russian supplies. Commodities are on a tear as ever-tightening sanctions on Russia have markets fearing major shortages of everything from oil to aluminum to wheat. Overall, AUD/USD traded with a low of 0.7138 and a high of 0.7235 before closing the day at 0.7231 in the New York session.

Trade U.S and Australian Stocks

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 40 and lies below the neutral zone. In general, the pair has lost 0.96%.

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 42 reading and lies below the neutral zone. On the whole, the pair has lost 0.43%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 54 reading and lies above the neutral region. In general, the pair has lost 0.07%.

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 46 and lies below the neutral region. Overall, the pair has lost 0.51%.

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 40 and lies below the neutral region. In general, the pair has lost 0.89%.

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