The Euro continues to climb as we enter today’s European trading session as hopes for a breakthrough in peace talks between Russia and Ukraine gave rise to the potential end of the conflict
The European currency has come under immense pressure in recent weeks over fears about the economic fallout from the war in Ukraine just as the European economy was beginning to bounce back after the Covid 19 pandemic.
Russia promised at peace talks in Istanbul on yesterday to reduce its military operations around Kyiv and the northern part of Ukraine, while Ukraine proposed adopting a neutral status which includes a promise not to join NATO if they would receive guarantees from the international community to protect them from further attacks.
It is unclear whether President Putin’s government is using ongoing talks to resupply and regroup militarily to mount a 2nd attack or whether it is genuinely pursuing a shift in strategy to reach a ceasefire after its spectacular failure to capture any major Ukrainian city. There will be further meetings in days ahead, but market participants are certainly welcoming the prospect of a negotiated peace settlement and if the momentum in peace talks continue, the euro should push higher.
Looking ahead on the economic calendar today, the main drivers of the EUR/USD currency pair will be a monetary speech by European central bank President Christine Lagarde as well as the release of consumer confidence and business climate figures from the Eurozone and CPI figures from Germany.
In the American session the market will await the all-important GDP figures from the US which will be closely monitored by the Fed in their quest to move more aggressively on interest rate hikes.