EUR FALLS ON ECB RATE DECISION

European stocks pared back some of the gains made on Wednesday after talks between the Ukrainian and Russian envoys failed. In a statement, Russia’s Sergey Lavrov rejected Ukraine’s proposals on neutrality and insisted that Russia’s proposals were not up for negotiation. The statement means that the conflict will continue in the coming days. Stocks also declined as more European companies announced their exposure to Russia. For example, Unicredit said that it has a 7 billion euro exposure while Credit Suisse has exposure of over $1 billion.

The euro declined slightly after the latest interest rate decision by the European Central Bank. As was widely expected, the bank decided to leave its monetary policy unchanged. It left interest rates where they have been since the pandemic started. It will also continue with its asset purchases. The bank sounded cautious because of the ongoing conflict in Ukraine, which could affect the ongoing recovery. Its main concern is that the conflict and the sanctions that followed will lead to substantial inflation in the near term.

The US dollar held steady on Thursday after the strong American consumer inflation data. According to the Bureau of Labor Statistics, the headline inflation rose by 7.9% in February after rising by 7.5% in the previous month. This increase was in line with the median estimate of 7.5%. In the same period, the core CPI, which excludes the volatile food and energy prices, rose from 6.0% to 6.4%. Still, analysts expect that the country’s inflation will keep rising in the coming months because of the ongoing crisis in Ukraine. Recently, the prices of key commodities like wheat, aluminum, and steel have all risen. At the same time, shipping costs have also risen.

EURUSD

The EURUSD pair rose slightly after the latest ECB decision and US inflation data. It is trading at 1.195, which is slightly below this week’s high of 1.1100. On the four-hour chart, the pair has formed a bullish flag pattern. It has also moved slightly above the 25-day and 50-day exponential moving averages while the MACD has moved above the neutral level. Therefore, the pair will likely have a bullish breakout in the near term.

USDCAD

The USDCAD pair retreated slightly on Thursday. It fell to a low of 1.2790, which was an important support level since it struggled to move about it in February. The pair has formed a break and retest pattern, signaling that it will bounce back soon. The pair is slightly above the 25-day and 50-day moving averages while the Force Index has retreated. Therefore, the pair will likely have a bullish breakout soon.

USDJPY

The USDJPY pair has been in a strong bullish trend in the past few days as the strength of the US dollar has remained. It is trading at 115.91, which is slightly below this week’s high of 116.17. On the four-hour chart, the pair is above the 25-day and 50-day moving averages while the Relative Strength Index has moved close to the overbought level. Therefore, the pair will likely keep rising as it nears its resistance at 116.33.