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During the North American session, the European currency extended its rally, so far up 0.40% in the week, amid uncertainty in the Russia/Ukraine conflict. At the time of writing, the EUR/USD is trading at 1.1379.
The conflict between Russia and Ukraine has kept the market mood continuously swinging since last Friday, putting macroeconomic data aside.
On Tuesday, Russian officials reported the withdrawal of troops near the border of Ukraine. However, developments in the last couple of hours suggested that ten new Russian battlegroups approached the border, as reported by Estonian and Ukraine intelligence.
Fed minutes telegraph a rate hike “soon” but would be data dependent, this is particularly believed to be a dovish signal.
The Federal Reserve released its January meeting minutes. The minutes revealed that the US central bank would end the QE by March, as scheduled on the December meeting. Also, Fed policymakers would like to remove policy accommodation faster than they anticipate and “soon” would like to raise the Federal Funds Rate.
However, FOMC emphasized that they would remain data-dependent and track the economic and financial developments. It is worth noting that Fed officials noted that “risks to inflation were weighed to the upside.
Back to the EUR/USD, the pair reacted upwards, to 1.1395, but geopolitical jitters put a lid on the move, retreating afterward to the 1.1380 area.
The EUR/USD remains neutral biased, trading within the 50 and the 100-day moving averages lying at 1.1328 and 1.1403, respectively. That said, any up/down break of the DMAs above can provide EUR/USD traders with a clear trend.
If EUR buyers reclaim the 100-DMA, that will open the door for further gains. The EUR/USD first resistance would be February 11 daily high at 1.1430, followed by February 4 high at 1.1483 and the February 10 YTD high at 1.1494.
On the flip side, the break of the 50-DMA would send the EUR/USD towards 1.1300. Breach of the latter would expose December 15, 2021, 1.1221 daily low, followed by 1.1200.
