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  • Due to deteriorating market sentiment amid geopolitical concerns, EUR/USD is showing its largest daily loss in a month.
  • Ukraine was officially invaded by Russia, Kyiv airport was captured, and the capital was attacked.
  • ECB speakers were more optimistic than Fed spokesman Daley.
  • US Q4 GDP data will brighten the calendar, but risk catalysts will continue to dominate.

The EUR/USD outlook is strongly negative as the risk-off sentiment triggers the rally in the US dollar being a safe-haven asset. The risk assets deeply suffer amid the Russia-Ukraine conflict.

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Russian forces do their part to shake global markets, which the West already fears, as the EUR/USD price attacks 1.1200, falling 0.75% towards 1.1210. Early Thursday, Europe’s safe assets and oil prices rose due to geopolitical tensions.

The latest report from Ukraine’s Ministry of Internal Affairs confirms media reports about cruise missiles and ballistic missiles being fired at Kyiv.

NATO had earlier confirmed Russia’s military action, while CNN recorded numerous explosions in Ukrainian cities.

Russian air forces are attempting to take control of Kyiv airport, told US Senator Marco Rubio, vice chairman of the Special Committee on Intelligence. US President Joe Biden promised “further consequences” for Russia in response to Moscow’s military actions.

As risk aversion sharply rises, 10-year Treasury yields have risen nine basis points (bps) to 1.88% in two days, whereas S&P 500 futures are down over two percent. On the day, the US Dollar Index (DXY) is up to no more than 0.50%, as safe havens are attractive.

Early comments from San Francisco Fed Chair Mary Daly boosted the US dollar on faster Fed rate hikes. A policymaker recently declared that a rate hike was “more urgent.”

On Wednesday, Robert Holtzmann, a board member of the European Central Bank (ECB), told NNZ that “the ECB could raise rates before it stops buying bonds.” Bostjan Vasle, an ECB politician, made statements in the same vein. Francois Villeroy de Gallo, who sits on the central bank’s board, said on Wednesday that “we will assess the indirect impact of the Ukraine crisis on inflation and economic growth in March.” However, Villeroy of the ECB adds: “We will rely on the facts.”

Investors will, however, be on the lookout for risk catalysts, but the second reading of US Q4 GDP, which is expected at 7.0% y/y versus 6.9% previously, will also be key.

EUR/USD price technical outlook: Bears pause at 1.1200

EUR/USD outlook

The EUR/USD price slumped to 1.1200 area where it found weak support and rose slightly. The key SMAs on the 4-hour chart are sloping downwards. The average daily range hits 127%, indicating massive volatility. The volume and price spread of the recent price bar are too high. It shows that the pair can potentially correct upwards before the downward continuation.

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