Euro Surges on Ukrainian Advance and A More Hawkish ECB

Euro

The Euro mustered up a 1.4% rise this morning as news filtered through of Ukrainian resistance in the east of the country as Ukrainian forces went on the counter-offensive.

Also, there was a clear dissatisfaction amongst ECB governing council members after the 75 bp rate hike was fully expected by markets and had little to no effect on markets. Following President Lagarde’s speech, the ECB sources mentioned that rate hikes could top 2% to combat inflation.

It was also some kind of admission that the 2023 growth forecast was buoyant.

The EUR/USD pair commenced the week with an upward move, picking up where it left off last week. After the ECB rate hike, the market disappointment saw EUR/USD drop towards 0.9900, where price action turned around.

The EUR/USD lift is because of a weaker dollar as the surging USD has taken a break. The USD picks up in the lead-up to next week’s Fed meeting, where markets price in a 90% probability of another 75 bp hike.

BTP-Bund spread seen steadily rising ahead of Italian elections. Plenty of ECB speakers to go around this week.

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