EUR/USD Collapses Due to Russian Missile Attack

Russia's military action eroded the exchange rates of the euro, ruble, and other high-risk currencies. On the other hand, the US dollar and its safe haven peers strengthened rapidly.

Russia fired missiles at several major cities in Ukraine, as well as landed troops on the southern coast. Russia's military action immediately eroded the exchange rates of the euro, ruble and other high-risk currencies. On the other hand, the US dollar and its safe haven peers strengthened rapidly. When the news was written, EUR/USD (24/February) was under pressure around 1.1245.

EUR/USD Daily chart via TradingView

Before ordering an attack on Ukraine, Russian President Vladimir Putin repeated his demands that NATO reject Ukraine's request to become a member. He claimed that he was forced to launch military action because Russia had no other choice but to protect itself from the threat of modern Ukraine.

"Russia cannot feel safe, develop and live with the constant threats emanating from the territory of modern Ukraine," said Putin. "All responsibility for the bloodshed will rest on the conscience of the regime in power in Ukraine."

Putin stated that the Russian military operation did not include plans to occupy Ukrainian territory. However, he did not explain how broad the scope of future attacks would be.

Ukrainian Foreign Minister Dmytro Kuleba tweeted, "Putin has just launched a full-scale invasion of Ukraine. Peaceful Ukrainian cities are under attack. This is a war of aggression. Ukraine will defend itself and will win. The world can and must stop Putin. The time to act is now."

The US and its allies have condemned Russia's attack on Ukraine. However, they have not explained what countermeasures will be taken. Meanwhile, financial markets immediately reacted violently.

Stock markets collapsed, while crude oil prices soared more than 5 percent to cross the $100 per barrel threshold. Traders and investors are hunting for safe havens while selling euros and high risk non-energy commodity assets.

AUD/USD and NZD/USD were boosted by the New Zealand central bank's decision yesterday, but immediately fell around 0.7 percent today. The pound sterling also fell more than 0.5 percent versus the US dollar.

“The situation clearly looks like it is going to get worse before it gets better, and that means commodity currencies could weaken,” said Joseph Capurso, a strategist at the Commonwealth Bank of Australia, “If things do get worse the Aussie could test 0.70 and the euro is poised to fall a bit more."