The Euro strengthened higher against the US dollar on Wednesday and at the same time investors were preparing for further developments in the Ukrainian crisis after Western countries announced sanctions against Russia for directing troops into separatist territories.
The Ukrainian military says one soldier has been killed and six wounded in gunfire by pro-Russian separatists using heavy artillery, in two provinces over the past 24 hours.
According to senior market analysts at Ebury, news headlines about what is happening in Ukraine are now the number one driver of the market. He added, however, based on currency market patterns, investors tend to trade risky currencies. This carries an indication that most assume that the worst -case scenario is avoidable.
Assuming no further escalation of conflict in Ukraine, Ebury is confident sentiment will be in favor of a risky currency as some countries begin to lift sanctions on the Covid-19 pandemic and this will stimulate the global economy.
The Euro has started the surge since this afternoon with the latest trading strong 0.18% at the trading level of 1.1345. Among the reasons for the strengthening of the Euro was the hawkish tone from the ECB to raise its exchange rate.
But some analysts expect the Ukrainian crisis will affect the decision of the ECB at its policy meeting next month. Further escalation of the conflict “appears increasingly likely and could lead to changes in the ECB at the March 10 meeting.
On the other hand, the Russian Ruble is depreciating reversing the gains made the previous day as investors took into account the sanctions imposed by western countries on Russia.
The US dollar index, which measures the US dollar against six major currencies, fell 0.12% to a trading level of 95.892. The New Zealand dollar jumped 0.9% after the Reserve Bank of New Zealand raised interest rates and said tightening was more likely to be needed.
The Yen slipped 0.2% to 130.5 against the US dollar after hitting a 3 -week high of 129.34 on Tuesday.
Market players are still focused on the development of geopolitical conflicts and the decisions of policymakers.
