Russian-Ukrainian Negotiations Stall, EUR/USD Collapses

The most popular currency pair on the forex market slumped to a five-week low, due to the stalemate in the Russia-Ukraine negotiations and the hawkish attitude of the Fed.

The euro fell to around 1.0810 against the US dollar at the start of the Asian session today (13/April), following the circulation of the latest statement by Russian President Vladimir Putin regarding negotiations with Ukraine. Single Currency is trying to move at the time of writing this news, but is still depreciating. On the other hand, the US dollar was supported by expectations of an increase in the Fed's interest rates which were increasingly established even though the publication of US inflation data last night missed expectations.

Russian-Ukrainian Negotiations Stall, EUR/USD Collapses

EUR/USD Daily chart via TradingView

The US consumer price index report showed core inflation growth of only 0.3 percent (Month-over-Month) in March 2022, instead of the 0.5 percent expected by consensus economists. The annual core inflation rate only grew from 6.4 percent to 6.5 percent, missing the consensus forecast of 6.6 percent.

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The report briefly rattled the greenback's position in the New York session, but the movement quickly recovered thanks to a statement by Federal Reserve Governor Lael Brainard. For the second time since earlier this month, Brainard confirmed that the Fed is committed to continuing its series of rate hikes and streamlining its balance sheet in the months ahead. Despite signs that inflation is starting to "cool", Brainard said it is necessary to review developments in the months ahead to ascertain whether the moderation in the rate of inflation continues.

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The statement by the figure who once competed in the nomination for Chair of the Fed versus Jerome Powell supports the US dollar exchange rate. The US dollar index (DXY) is consolidating its position above the 100.00 threshold, although the momentum of the bullish rally has slowed.

The US dollar's position was also supported by the continued depreciation of the euro amid the West versus Russia proxy war in Ukraine. In his first public communication since the withdrawal of Russian troops from northern Ukraine, President Vladimir Putin said talks with Ukraine had reached a "deadlock situation".

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He stressed that Russia would continue military operations to realize all of its targets in Ukraine. However, the most important strategic target is the collapse of the unipolar international order built by the US after the Cold War.