The Euro made strong advances on Tuesday due to “constructive peace talks between Ukraine and Russia”. Russia has recently announced it will "drastically reduce" military combat operations in two key areas of Ukraine "to boost mutual trust" in peace talks. While the decision to scale back operations around the capital, Kyiv, and the northern city of Chernihiv is the first sign of tangible progress from talks - it is unclear how extensive any reduction in military activity might be, and Ukraine remains sceptical. Ukrainian President Volodymyr Zelensky said in an overnight address that the signals from Russia “are positive, but those signals do not drown out the explosions or Russian shells”. During the peace talks yesterday, “Ukraine proposed to become a neutral state in exchange for security guarantees”. If the situation does in fact improve or peace talks are successful, risk-on currencies such as Sterling would flourish, and safe-haven assets such as the Dollar, would depreciate.
Sterling was able to hold minor gains against the Dollar on Tuesday. GBPUSD opened at 1.3108 and closed at 1.3139. The Dollar Index (DXY), which gauges the Greenback's strength against a basket of six currencies, slipped 0.24 per cent to 98.20 yesterday.
Due to a weaker Dollar, EURUSD was able to reclaim the 1.11 handle in Tuesday’s session. The pair opened at 1.1005 and closed at 1.1105.
GBPEUR in contrast made a loss yesterday. The pair opened at 1.1911 and closed at 1.1832.
At 10:00 the Eurozone will publish its Consumer Confidence, Economic Sentiment, and Industrial Sentiment data for March. At the same time, European Central Bank President Christine Lagarde will be speaking. At 13:00 Germany will release its preliminary Inflation Rates. The YoY figure is expected at 6.3% and MoM at 1.6%. Then in the afternoon from the US, final GDP Growth Rate QoQ will be released.
