- EUR/USD has rebounded from 1.0820, which seems a dead cat bounce in absence of any fundamental trigger.
- The DXY has slipped below 99.00 amid uncertainty over US inflation numbers.
- Euro events this week: ECB’s monetary policy, GDP numbers, and Employment data
The EUR/USD pair has rebounded superficially after hitting the nine-month low of 1.0820 on Monday. The rebound is not backed by any fundamental development in the world economy. Therefore, electing the risk-aversion theme would be optimal at this point. However, the oil situation is getting worse as US President Joe Biden is considering a ban on Russian oil imports in the US without the participation of allies in Europe, at least initially, as per Bloomberg.
The consideration of prohibition of Russian oil imports is likely to be followed by the other nations too. There is no denying the fact that the consideration will significantly impact the Russian economy but Europe will also face multiplier effects.
It is worth noting that Europe augments its 40% of natural gas demand and more than a quarter of the oil import from Russia. Therefore, the largest impact of imposing a ban on imports of Russia’s oil will be faced by Europe. This may heat inflation in the Eurozone and the shared currency will face turmoil.
Adding to that, the shelling of Zaporizhzhia nuclear power in Ukraine by Russian rebels has intensified the fears of international security. This has been a major driver in barricading the major.
Meanwhile, the US dollar index (DXY) slips below 99.00 on profit-booking by the market participants. While the 10-year US Treasury yields tumble below 1.7% on the broader risk-aversion theme.
This week, the interest rate decision from the European Central Bank (ECB) holds significant importance. It is worth noting that the ECB has not increased its benchmark rates yet. Apart from the ECB’S monetary policy, Gross Domestic Product (GDP) numbers and Employment change data from the Eurozone, both on Tuesday will be keenly watched. While US inflation numbers on Thursday will keep the investors on their toes.
