Best day in 5-years for EUR/USD ahead of the March ECB meeting

It’s been a turbulent ride for euro traders, having fallen beneath 1.0800 to a fresh 22-month low then enjoying its most bullish day in over five years. And that’s just the past 24 hours, ahead of today’s ECB meeting. The catalyst for the rally is seemingly Ukraine’s openness to ‘neutrality’, which is a key demand from Russia to end the war. And with Europe being a bit too close to the action, European markets are clearly sensitive to headlines surrounding the Ukraine crisis, both good and bad. The DAX rallied over 8% and the euro saw widespread gains against other currencies.

Euro explained – a guide to the euro

What does this mean for today’s ECB meeting?

Perhaps the exchange rate (that they supposedly don’t focus on…) becomes a focus once more, or they simply use it as a reason to tread even more carefully than they already are. And that could mean not mentioning a specific end date for their asset purchases and / or opting for a lower pace of tapering.

But we should expect a warning of inflation, given the rapid rise in commodities since Russia’s invasion of Ukraine. Yet without wanting that to sound hawkish, they could hint at not hikes before 2023. Ultimately, a cautious tone was always expected from the ECB today, given the circumstances surrounding Ukraine. And we doubt yesterday’s rally will change that as the situation is still very much evolving, which leaves the euro open to large moves from headline risk.

US inflation could be a moot (data) point

The US also release inflation date but it is unlikely to be much of a market mover. The Fed have all but confirmed a hike at next weeks meeting and, even if CPI is to soften today, it would be hard to take too seriously given the meteoric rise in commodities.

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.