The Euro is currently stuck in familiar ranges, on its weaker levels in the past few weeks, but it has the potential to move dramatically as European leaders are boiling in anger.
Overview
As Russian troops go further east, Ukraine reports that there is clear evidence of war crimes committed, even finding mass graves.
Across the continent, the feeling is one of awe and the continent seems resolute to cut off Russia even further. The isolation of the country, however, is causing a lot of havoc in energy trading and now with more financial restrictions, Russia is basically cut off from most regular business.Banning coal imports would be a major move and the consequences could be dire for the economic growth, if any, that the continent could achieve in the next year. Purchasing Managers Indices, as well as Industrial Production, are already suffering as demonstrated in data from France and Spain this morning. We think things will get worse before they get any better.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has kept its gains, for now, after a week that saw the deflation of the buck as data did not seem to match the intentions of the Fed. More importantly, this week has seen some officials raise their voices about the European Central Bank’s need to consider controlling high inflation.
In particular, energy prices on the other side of the Atlantic have made it very difficult for companies to do well and political friction has complicated the effectiveness of natural gas and oil from other nations. ECB member Luis De Guindos echoed the sentiment of others in saying that the inflation being experienced may not be transitory.
AUD
The Australian Dollar is trading at its strongest levels since mid-June following confidence from the Reserve Bank of Australia after they met earlier. Officials discussed policy and removed the term “patient” from their statement in regard to waiting-and-see until hiking interest rates.
The fact that this is no longer a matter of patience bodes well for Aussie prospects for appreciation as higher rates will only attract more investors to AUD. An economy that also benefits from higher demand for raw materials does not hurt either.
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