EUR/USD is calm, trading on both sides of the 1.1000 level. In the European session, the currency is at 1.0988.
Roubles only, please
The euro continues to trade in choppy waters, unable to maintain any momentum due to the uncertainties over the war in Ukraine. Russian President Putin through a monkey wrench into the mix on Wednesday, when he announced that payments for Russian natural gas by “unfriendly nations” would have to be paid in Russian roubles. This appears to be an illegal move by Putin, but then again, he does hold the cards when it comes to supplying the energy needs of Western Europe. The crafty move by Putin, which has shaken up the energy markets, is another headwind for the euro to contend with.
The surge in global inflation has seen the major central banks respond with tighter policy, with the notable exception of the European Central Bank. Earlier this week, ECB President Lagarde acknowledged that the Fed and ECB were moving out of sync, a clear sign that Lagarde does not intend to change the Bank’s dovish stance, even though inflation continues to accelerate in the eurozone. Lagarde noted that Europe was more exposed to the war in Ukraine than the US, due to geographical proximity, and the war will have very different effects on the US and on the eurozone, which required different monetary policies.
As expected, German PMIs slowed in February. Manufacturing PMI dropped from 58.4 to 57.6, and Services PMI fell from 55.8 to 55.0 points. Investors didn’t seem all that concerned, as the readings managed to beat the forecasts. It was a similar story for the eurozone PMIs, as the manufacturing and services sectors continue to show growth.
- 1.0923 is the first line of support, followed by 1.0794
- There is resistance at 1.1030, followed by 1.1159