It’s been a dramatic afternoon, as EUR/USD has rocketed in the North American session, gaining 1.16%. The pair is currently trading just above the 1.11 level.
The euro showed limited movement for a week, which led me to caption Monday’s post as, “Euro looking for direction.” Twenty-four hours later, my heading looks outdated, as the euro has leaped upwards and posted massive gains of 120 points, breaking past 1.10 and then the 1.11 level.
The driver behind this impressive and unexpected jump was news that Russia had softened its position at the negotiating table. In talks held in Turkey today, Russia said that it was scaling down its forces in northern Ukraine and held out the possibility of direct talks between Russian President Putin and Ukrainian President Zalensky once the sides had prepared a draft peace treaty.
Anyone following the war can attest that whatever comes out of Moscow has to be taken with a grain of salt. There has been speculation that Russia is using the peace talks as a cover to reorganize its forces after being held to a stalemate by the outnumbered and outgunned Ukrainian army.
Moscow may have decided to focus its efforts on the eastern part of Ukraine and consolidate its grip on areas it has already conquered. President Zalensky has reiterated that Ukraine will not compromise on its territories, so significant gaps exist between the sides.
Still, the markets jumped on positive news out of Ukraine, and European equity markets have climbed around 2% today.
After starting the day in quiet mode, the euro has sparkled and jumped over 1 percent. The massive move illustrates that to a considerable extent, the euro’s movement is being dictated by developments in Ukraine, and what goes up can quickly come down if the apparent progress in the peace talks turns out to be another dead end and the crisis worsens.
EUR/USD Technical
- EUR/USD has support at 1.1053 and 1.0940
- There is resistance at 1.1274, followed by 1.1441
