• The hopes that war in Ukraine might be entering in to a new de-escalating phase favors the Euro.
• Rising bets over an interest rate hike by the ECB underpins the Euro bulls.
• ECB’s Lagarde says Cost of living in Europe will Spiral as Ukraine war drags on.

The Euro edged higher against the US dollar on Thursday, with the hopes that the war in Ukraine might be entering a new de-escalating phase and amidst rising bets on the rate hike from ECB for the first time since the Covid-19 pandemic.

At peace talks in Istanbul, Russia said it would curtail operations near Kyiv and the northern city of Chernihiv to build trust, though Ukraine and its Western allies dismissed Russia’s pledge as a ploy to stem losses and prepare for other attacks.

President Zelenskyy said Ukrainian forces are preparing for new Russian attacks in the east of the country as Moscow builds up its troops there after suffering setbacks near the capital Kyiv.

European Central Bank (ECB)’s policymakers are pressurized to elevate the interest rate due to rising inflation in Eurozone. Meanwhile, German Consumer Price Index (CPI) portrays that German annual inflation could climb to 7.3%, which is the highest print in more than four decades. Thus showing an interest rate hike by the ECB sooner rather than later. 

European Central Bank chief Christine Lagarde warned Wednesday that a prolonged conflict in Ukraine would spur the energy prices and the cost of living higher for Europeans During a visit to Cyprus, Lagarde said Russia’s invasion of Ukraine last month had brought “considerable uncertainty” to the outlook for European Union economies.

“The economic impact of the war is best captured by what economists call a ‘supply shock’ which simultaneously pushes up inflation and reduces growth,” she told an event in Nicosia.

Moving on, Investors will keep an eye on the EU’s unemployment data which is expected to drop at 6.7% against the prior record of 6.8% While, the US docket will report Initial Jobless Claims, which are likely to surge by 197k against the previous addition of 187k.

EUR/USD 4 Hour Chart:

Support: 1.1104 (S1), 1.1052 (S2), 1.1019 (S3).

Resistance: 1.1190 (R1), 1.1223 (R2), 1.1276 (R3).

The expectation of rate hike and hopes of Ukraine war entering to new de-escalating phase favors the Euro; we expect a bullish trend for EUR/USD.