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Souring Risk Sentiment Weighs On Euro, EURUSD Prints Below 1.1100

FOREX
  • Amid the ongoing Russia/Ukraine warfare, market expectations of the first ECB rate hike were pushed back to 2023, in turn weighing on the Euro throughout Tuesday’s session.
  • Euro weakness was fairly broad based with notable extensions lower in EURJPY and EURCHF, the latter sinking to the lowest point since shortly after the removal of the floor in January 2015.
  • EURUSD (-0.84%) also plunged to fresh recent lows, printing below the 1.11 handle to 1.1090. Having temporarily breached support and the bear trigger through 1.1106, the next targets are 1.0976, 2.00 projection of the Jan - Jun - May ‘21 price swing and 1.0871 Low May 25, 2020.
  • EURUSD weakness and renewed selling pressure in equities lent support to the dollar index which climbed around 0.7%. Heavy euro crosses and the continued surge in commodity prices prompted relative resilience in the likes of AUD (-0.17%), NZD (-0.34%) and to an extent CAD (-0.45%).
  • EURGBP weakness also kept GBP on a relatively firm footing, however, cable played catch up to the broad USD strength, shooting down from 1.34 to within close proximity of the 1.33 handle.
  • In emerging markets, PLN, HUF and CZK were all offered throughout the session amid the single currency weakness and their direct exposure to the Ukraine crisis. Both Hungarian and Polish central banks took the opportunity to verbally intervene, dragging the local currencies off the worst levels.
  • Australian GDP data kicks off Wednesday’s APAC session before the European docket is highlighted by Eurozone HICP Inflation flash estimates. Later on Wednesday, the Bank of Canada are expected to commence lift-off with a quarter point hike to 0.5%.
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