• Dollar gains some ground with Fed Powell’s comments portrayed that central bank would take a more aggressive monetary policy path.
• ECB President Largade noted “Ukraine war would have growth consequences in the Euro area.”
• Ukraine war jitters weigh on market sentiment and creates negative prospect for Euro.

Euro drops against the US dollar during Tuesday Asian trading session due to escalating Ukraine war jitters and Powell’s hawksih comments.

Federal Reserve Chief Jerome Powell spoke at NABE annual conference that the Fed would take the “necessary steps” to tame inflation towards the bank’s target of 2%, even if it needs to hike rates more than 25 basis points at a meeting or meeting. Moreover, Powell also said that “if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”

On the other hand, few ECB speakers also crossed wires on Monday. Vice President Luis de Guindos said that inflation is to stay firm longer than seen before. Meanwhile, ECB’s Klaus Knot said that a hike this year is “realistic”. In the same line was the comment from ECB’s Holzmann, who said that a rate rise could send a clear message that the ECB is committed to tackling inflation, even before ending the QE. ECB’s President Madame Lagarde said that bottlenecks, energy, and food were pushing short-term inflation and added that the Ukraine war would have growth consequences in the Euro area.

Escalating Russia – Ukraine jitters seems to undermine the euro. Recently, Ukraine President Volodymyr Zelenskyy said that no immediate decision is possible on occupied Ukrainian territory per Interfax. Moreover US President Joe Biden also cited fears of a cyberattack against the US.

Economists at Commerzbank noted that the market is likely to see the fact that Russian offensive operations are only happening in selected areas, whereas the Russian invaders are largely starting to dig in defensive positions. I think many market participants regard this as a signal for a prolonged war.”

“The longer the war continues the more likely it becomes that the real economic and inflationary effects above all for the eurozone will be significant. And that is why that prospect is negative for EUR/USD.”

EUR/USD 4 Hour Chart:

Support: 1.0995 (S1), 1.0972 (S2), 1.0935 (S3).

Resistance: 1.1056 (R1), 1.1093 (R2), 1.1116 (R3).

Fed Powell’s speech and Ukraine jitters weigh on the Euro and we expect a bearish trend for EUR/USD.