Euro managed to erase some of its previous week’s losses and ended trading around 1.1370 level. Headlines of Russia – Ukraine crisis dominated the financial markets, but it did not show any peace talks progress. However, during the first half, Optimism over a probable truce between the two gave sigh of relief to risk-sensitive currencies such as the Euro. US Federal Reserve monetary policy decision also acted as a major catalyst in driving the market which helped the US dollar. The Fed has increased fund rate by 25 basis points to 0.50% for the first time since 2018 and meet the market expectation, the bank has hinted at seven rate hikes in 2022, that is, one at each remaining monetary policy meeting, and affirmed the commitment to start reducing its $9 Trillion balance sheet after their next meeting.
Russia wishes to find a diplomatic solution if Kyiv recognizes the independence of the Donbass region through the creation of the People’s Republics of Donetsk and Luhansk. Whereas on contrary, Ukraine made it clear that they would not negotiate “an inch of Ukrainian territory,” according to one of President Zelenskyy’s aides, Ihor Zhovkva.
In this week, US Core Retail Sales monthly report on 15th March and Eurozone Trade Balance n.s.a. on 18th March favored downtrend whereas Eurozone HICP monthly report on 15th March and US Building Permits and Initial jobless claim on 17th March favored the uptrend for the pair.
The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Mar 21, ECB Non-monetary Policy Meeting, EIA Crude Oil Stocks Change at Mar 23, US Core Durable Goods Orders monthly report, Initial Jobless Claims at Mar 24, Eurozone Ifo Business Climate, Michigan Consumer Sentiment and Fed Governor Waller Speech at Mar 25.
EUR/USD Weekly outlook: