The EUR/USD pair has fallen dramatically in the early European session on Thursday, coming a few inches to the 1.1200 support. The massive sell-off comes amid heightened geopolitical tensions as Russia invades Ukraine, which sparked risk flight by investors into safe-haven assets like gold and oil.
Recent updates from Ukraine’s Interior Ministry confirm that Kyiv, the nation’s capital, is currently under military attack from Russia. The North Atlantic Treaty Organization (NATO) has officially confirmed aggressive military actions by Russia on Ukraine, while CNN has marked multiple explosions and casualties in Ukraine cities.
Following the military Russian invasion, US President Joe Biden, who has previously placed sanctions on the European giant, has promised “further consequences,” while US Senator Marco Rubio, Vice-Chairman of the Select Committee on Intelligence, confirmed that Russia had launched airborne attempts to occupy the Kyiv airport.
EUR/USD to Sustain Decline Amid Stronger Dollar
Amid the risk flight and heightened volatility, the US 10-year Treasury yield has fallen back under bearish momentum and has declined by nine basis points (bps) to 1.88%, while the S&P 500 Futures dropped by over 2% earlier today. Notably, the US Dollar Index (DXY) is up by 0.50% at press time amid the influx of investors into safe market-haven assets.
Meanwhile, fresh comments from San Francisco’s Fed President Mary Daly also boosted appeal for the greenback amid indications of faster Fed rate hikes.
Meanwhile, European Central Bank (ECB) governing board member Robert Holzmann stated on Wednesday in an interview with NNZ that “it is possible for [the] ECB to hike rates before ending bond purchases.”
However, ECB board member Francois Villeroy de Galhau noted yesterday that “we will assess the more indirect consequences of [the] Ukraine crisis on inflation and growth in March,” adding that “We will be facts-driven.”
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