- The euro in yesterday’s trading session climbed from 22-month lows against the U.S dollar
- Investors were also hesitant to sell the euro ahead of a European Central Bank policy meeting
- The British pound edged higher against the U.S. dollar but was little changed against the euro
Forex market
The euro today climbed from 22-month lows against the U.S. dollar hit the previous session, lifted in part by expectations that the eurozone will increase fiscal spending to help offset the economic effects of Russia's invasion of Ukraine.
Investors were also hesitant to sell the euro ahead of a European Central Bank policy meeting on Thursday. The prospect of stagflation has prompted economists to suggest policymakers might delay rate hikes until late in the year.
Europe's single currency, which has been pummeled since the start of the latest geopolitical turmoil, also gained versus other currencies such as the yen, Swiss franc and sterling. Bloomberg News reported today that the European Union plans as soon as this week to jointly issue bonds on a potentially massive scale to finance energy and defense spending.
Economic Calendar
There is a risk that the ECB president may acknowledge euro weakness as among the headwinds facing the bloc's economy. That's been enough to offer the euro at least a momentary reprieve. In addition, the international oil benchmark Brent crude backed off yesterday's 14-year high of just under $140 per barrel, which helped boost euro sentiment. Brent was still up 4.3% on Tuesday at $128.50 per barrel. The euro regained some ground after five sessions of declines versus the dollar. It was up more than a cent from a trough of $1.0806 yesterday, its lowest since March 2020 when the COVID-19 pandemic gripped Europe.
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The euro briefly traded at parity with the Swiss franc on Monday for the first time in seven years. It rose 0.9% on Tuesday to 1.0134 francs. Traders are expecting choppy markets over the next few months, with euro/dollar volatility gauges at their highest since the market chaos of March 2020. As the euro gained, the dollar index, which measures the greenback against a basket of six global peers, was flat to slightly lower at 99.15. That said, the safe-haven dollar remains an in-demand asset despite today's slight pullback.
Since Russia's invasion on Feb. 24, the dollar has gained around 3.3% as the crisis has intensified. Besides the commodities' rally, the war and subsequent Western sanctions have crushed Russian assets, with the rouble falling to a record low of 160 to the dollar in erratic offshore trade yesterday.
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Euro
The single currency climbed from 22-month lows against the U.S. dollar hit the previous session, lifted in part by expectations that the eurozone will increase fiscal spending to help offset the economic effects of Russia's invasion of Ukraine. Investors were also hesitant to sell the euro ahead of a European Central Bank policy meeting on Thursday. Overall, the EUR/USD traded with a low of 1.0884 and a high of 1.0665 before closing the day around 1.0934 in the New York session.
Yen
The Japanese Yen traded lower as the crisis in Ukraine is giving the BoJ a headache not facing other major central banks, forcing it to maintain a more dovish stance on monetary policy despite rising inflationary pressures and a dearth of tools to combat another economic downturn. Unlike other advanced economies, Japan is still shackled by COVID-19 curbs. Overall, the USD/JPY traded with a low of 114.63 and a high of 115.53 before closing the day around 114.83 in the U.S session.
British Pound
The British Pound edged higher against the U.S dollar today but was little changed against the euro after an earlier bounce in the single currency proved short-lived. The Sterling has been at the mercy of dollar strength in recent days, which led to the currency pair dropping to its lowest level since Nov. 2020 during Asia-Pacific trading hours today. Overall, the GBP/USD traded with a low of 1.3200 and a high of 1.3353 before closing the day at 1.3238 in the New York session.
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Canadian Dollar
The Canadian Dollar fell to its lowest level this year against the greenback as the U.S banned Russian oil imports, adding to an uncertain outlook for the global economy. U.S crude prices settled up 3.6%. Oil is one of Canada's major exports but the historic link between the Canadian dollar and energy prices has weakened during the Russia-Ukraine crisis. Overall, USD/CAD traded with a low of 1.2667 and a high of 1.2789 before closing the day at 1.2735 in the New York session.
Australian Dollar
The Australian Dollar surrendered some ground today amid concerns booming commodity prices would drag on global growth, and Australia's central bank sounded in no rush to raise rates. Reserve Bank of Australia (RBA) Governor Philip Lowe warned the jump in commodity prices would likely lift inflation further and could feed through to wage claims. 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.
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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 1.70%.
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 1.35%.
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 gained 0.06%.
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 0.35%.
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 0.86%.
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