EUR/USD Consolidating Amid Russia-Ukraine Talks

EUR/USD is getting a breath of fresh air, while market participants continue to monitor prospects for peace between Russia-Ukraine.

The US dollar along with a number of other safe haven assets suffered a setback in today's trading (1/March), although they are still holding near the high range formed since the outbreak of the Russia-Ukraine war last week. Instead, the euro started consolidating to form a stronger support. Market participants continue to monitor prospects for peace between Russia-Ukraine after the first round of dialogue ended in zero.

EUR/USD Daily chart via TradingView

The talks between Ukraine and Russia took place earlier this week, just four days after Russia bombarded the capital Kyiv. Moscow demands that all of its demands be met unconditionally, including legitimizing Russia's sovereignty over Crimea and guaranteeing Ukraine's neutral status. Neutral status is the most controversial point since before the war broke out, because it means that Ukraine will not join NATO. On the other hand, Ukraine hopes for an immediate ceasefire and the withdrawal of Russian troops from its territory.

The first round of dialogue on the Ukraine-Belarus border was deadlocked because the two sides were reluctant to compromise. The sound of explosions reverberated in Kyiv and Ukraine's second largest city, Kharkiv. However, mass media reported that the two sides would discuss it again in the coming days.

"No one knows what will happen next: Russia may get more aggressive, or they may agree to something, although what (the agreement) will be is very difficult to predict," said Shinichiro Kadota, senior FX strategist at Barclays.

Meanwhile, market players are also highlighting the news about the central bank's actions. The US Federal Reserve and the Bank of England are both likely to raise interest rates this month. However, opinions differ on whether they will raise interest rates by 25 or 50 basis points. Other central banks have been relatively calm, but the market is also monitoring their statements to see how far the Russia-Ukraine conflict will impact global monetary policy.