The U.S. Dollar is trading in tighter ranges following news that high-level talks between Russia and Ukraine to reach a resolution have failed to achieve any changes.
Overview
Data-wise, the U.S. inflationary pressures seemed to have eased as Consumer Price Index figures this morning showed a slower expansion for February at 0.5% over the January 0.6% figure. CPI YOY stands at 7.9% as was expected. Real Average Hourly Earning declined more than the month prior (-2.6%).Things are getting complicated for Russia as it becomes the most sanctioned nation in the world over Iran and North Korea. At the time of writing, Goldman Sachs announced that it would exit Russia, representing Wall Street’s first pullout. In order to isolate Russia further, the UAE said it will make a call for OPEC+ to produce more barrels faster. We shall see if FX-wise things are calm before another storm, but at this point, anything is possible: escalation or resolution.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is moving within a tight rate band as the European Central Bank’s Chairwoman Christine Lagarde finished her press conference following the ECB meeting. Per their notes, it seems the ECB officials are predicting a period of “stagflation“ for this year. While they upped their inflationary expectation to 5.1% from 3.2%, they see it eventually stabilizing to 2.0% in 2023.
Additionally, they lowered their Gross Domestic Product growth expectation from 4.2% to 3.7%. Thus far, the Euro is not suffering, but all eyes are on the conflict’s developments as the parties involved cannot seem to find a way towards peace.
MXN
The Mexican Peso has been moving wildly, finally appreciating in the past few days to get away from its weakest levels since the start of last December. Oil and commodities have played a major role in making Peso attractive, but the overall global concern over chaos caused serious depreciation following the shock of tanks rolling into Ukraine.
While the safe-haven lure of the buck may weaken some, expect this currency pair to be all over the place and ultimately average 20.0 as we have accurately predicted for quarters since the pandemic began. Banxico is also looking to increase rates to control inflationary growth, so the Peso should always find that as a factor for buoyancy.
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