The euro lost ground on Tuesday and has fallen below the 1.12 level. In the European session, EUR/USD was trading at 1.1173, down 0.40% on the day.
The fighting intensified in Ukraine, with a Russian armored column stretching for miles slowly winding its way towards the capital Kyiv. Russian forces have been shelling major cities, as defiant Ukrainians brace for the fighting to intensify.
The US dollar was flat today against the majors, with the dollar index up slightly to 96.99. EUR/USD actually showed gains in the Asian session but has since reversed directions.
Risk appetite remained subdued, but there appeared to be less pessimism and panic in the markets compared to the past few days. This could be based on the notion that investors feel that the bulk of the West’s sanctions against Moscow have already been announced, so "the worst is behind us."
This could quickly change of course, based on developments on the ground in Ukraine. As well, Russia will not take these sanctions lying down, and its response could dampen risk sentiment. Investors remained glued to the crisis, which was the driver of the direction of the markets and was overshadowing economic releases.
German CPI expected to accelerate
On the economic calendar, German CPI, which was to be released later today, was a key event. The ECB was keeping a watchful eye on rising inflation and some ECB members wanted the central bank to take a more hawkish stance in order to contain inflationary pressures. German CPI was expected to rise 0.9% m/m in February, up sharply from 0.4% in January. On an annual basis, CPI was projected to hit 5.1%, up from 4.9% beforehand. The ECB holds a policy meeting on Mar. 10, and a jump in German inflation will put pressure on ECB President Lagarde to tighten policy.
EUR/USD Technical
- There is resistance at 1.1406 and 1.1538
- There is major support at 1.1100. Below, there is support at 1.0974
