The Major currency plummeted against the greenback and has hit a low of 1.0885, the lowest level since May 2020 in this week. The War acted as the main driver in the drop of the pair. Leaders from all the West’s nations have asked President Vladimir Putin to put a halt to the war, but of no use. On Thursday, Putin said that he aims to reach its goals and will continue no matter what. While Putin agreed on the creation of safe corridors to evacuate civilians, he persisted in bombing Ukrainian cities. It has impacted the financial markets intensely. Commodity price especially gas and oil prices has skyrocketed. EU shares with business exposure to Russia plummeted, although those related to defense and cyber security rose sharply.
Worldwide central bankers noted that the Russian-Ukrainian war would worsen inflation. The European Central Bank released the accounts of its latest meeting that portrayed that members believed a scaling-back of monetary accommodation should commence, adding that members believe that inflation was likely to continue higher-than-predicted for longer. Market is expecting chances of an ECB hike from 2023 to later this year. Meanwhile, Fed Chair Jerome Powell reiterated his support for a 0.25% rate hike, also showed readiness for a 0.50% rate-lift if needed in the March meeting, during the second round testimony the previous day. While portraying the market implications from Powell’s comments, CME’s FedWatch Tool marks around 89% odds favoring the same rate-lift in the next month’s Fed meeting.
In this week, Eurozone CPI monthly report on 28th February and US ISM Non-Manufacturing PMI on 3rd March favored uptrend whereas Eurozone Markit Manufacturing PMI on 1st March and Fed Chair Powell Testimony on 2nd and 3rd March favored downtrend for the pair.
The major economic events deciding the movement of the pair in the next week are Eurozone Employment Change quarterly report at Mar 08, US JOLTS Job Openings, US EIA Crude Oil Stocks Change, US WASDE Report at Mar 09, ECB Interest Rate Decision, ECB Monetary Policy Press Conference, US Initial Jobless Claims, Federal Budget Balance at Mar 10 and Michigan Consumer Sentiment at Mar 11.
EUR/USD Weekly outlook: