We’re about to complete one month since the day of the Russian invasion in Ukraine and the war is still raging without any visible diplomatic solution ahead. President Biden is beginning his visit to Europe as he plans to apply more sanctions to Russia, along with the rest of the west. These developments are reflected in the reactions of the financial markets. The major stock indices are in a corrective mode today while gold and oil perform profits. The US dollar is rising this week and most of the rest currencies that are supposed to be risk-on options, perform losses. The bond yields are also rising sharply: the US 10 year bond yield opened the week at 2.15% and currently, it is moving at 2.36%.

Since the interest rates hikes took place last week in US and UK and at the Eurozone the interest rates are not expected to hike before Q3 2022, the markets are mostly moving through the risk on/off mood. The Cleveland Fed President Lorretta Mester announced that she supports the 0.50% hike in the next sessions and this gives more hawkish anticipation to the Fed. The economic calendar is poor so far but in the remaining days of the week, more important announcements will come.

EURUSD (current price 1.0982) is bearish this week and it has already dropped below 1.10, which is always a milestone price. The strength of the dollar and the weakness of the euro are the results of the negative sentiment in the markets as the war in Ukraine is raging and no peace talks so far seem to be effective. There were no important economic announcements in the Eurozone area so far but tomorrow the PMIs are announced in Germany/Eurozone/UK/US and will learn what the biggest managers in the world estimate regarding the war effects on the global economy. If the situation stays as it is, we may see the pair dropping to the price area of 1.08.

GBPUSD (current price 1.3207) is still bullish this week although today, strong corrective trends appeared. Earlier today, the February inflation in the UK was announced at 6.2%, significantly higher than the 5.5% in January. This fact under normal circumstances would make the sterling stronger as it would suggest a tighter monetary policy and quicker interest rates hiking by the Bank of England but on the contrary, the sterling dropped sharply. Also, Chancellor Rishi Sunak’s announced a fuel duty tax cut but it did not helo the GBP recover as well. The strength of the USD overrides any other aspects so we won’t be surprised if we see the GBPUSD moving to the 1.30 area unless some positive war news occurs.

USDJPY (current price 120.98) is very bullish for the 3rd week in a row. The strong US dollar, the rising bond yields, and the weakness of the Japanese currency are the main reasons for that. The Bank of Japan keeps on having a loose monetary policy and negative interest rates due to the relatively low inflation. The Japanese inflation is announced on Friday and if the markets’ estimations come true, the rate won’t make the BoJ change its mind. Technically speaking, the bullish breakout of the ex multi-year high price & important resistance, set the pair free, and now many buyers dream of the price area of 123.75 which is the next major resistance.