Euro US Dollar Exchange Rate Mixed as Russia Reportedly Withdraws Troops from Ukraine Border
The Euro US Dollar (EUR/USD) exchange rate is trading in a narrow range this afternoon amidst reports Russia is withdrawing some of its military units from Ukraine’s border, though is yet to be seen on the ground.
At the time of writing, the EUR/USD exchange rate is trading at around $1.1363, with minimal market movement from today’s opening level.
Euro (EUR) Subdued Amid Developing Geopolitical Position
The Euro (EUR) is trading flat against the US Dollar (USD) as Russia has reportedly withdrawn a number of troops from the Ukraine border.
This is easing geopolitical tensions and supporting the single currency as the chances of war breaking out on the EU’s doorstep appear to be falling.
However, many world leaders are sceptical of Russia’s intent as ‘the escalation of Russian troops at the Ukrainian border is increasing and significant’, according to Canada’s Defence Minister, Anita Anand.
Secretary-General of Nato, Jens Stoltenberg, said:
‘We have not seen any withdrawal of Russian forces. And of course, that contradicts the message of diplomatic efforts.
‘What we see is that they have increased the number of troops and more troops are on their way. So, so far, no de-escalation.’
This is limiting the Euro’s potential against its stronger peers as EUR investors remain cautious of Russia-Ukraine developments.
US Dollar (USD) Directionless Despite Retail Sales Beating Forecast
The US Dollar (USD) is muted against the Euro (EUR) this afternoon in spite of an upbeat US retail data.
January’s figures printed above market forecasts, with sale growth jumping 3.8%, versus a 2% rise and significantly higher than December’s 2.5% contraction.
This is the largest increase in retail sales since March 2021, with non-store retailers and furniture stores being the largest contributors despite surging inflation and high coronavirus case numbers.
Sal Guatieri, a senior economist at BMO Capital Markets, said:
‘The strong rebound in January retail sales, though partly in response to last year’s weak finish and inflated by higher prices, suggests consumers still have plenty in the tank to propel the expansion forward this year.’
Moreover, January’s import and export data is further supporting USD as they both publish higher than market forecasts and previous readings, printing at 2% and 2.9%, respectively.
However, the current news that Russia has begun the process of removing troops from the Ukraine border is somewhat improving market mood and therefore limiting the ‘Greenback’ gains.
Euro US Dollar Forecast: FOMC Minutes Take Centre Stage
The Federal Open Market Committee (FOMC) minutes are scheduled for release later this evening which will be a key driver for the Euro US Dollar exchange rate.
The ‘Greenback’ is likely to climb against many of its peers should the minutes reinforce expectations for an aggressive rate hike from the Federal Reserve at its next policy meeting.
In addition, a number of speeches from the Fed’s policymakers on Friday may impact USD should they hint at the bank’s future direction of QE.
Similarly, the Euro is likely to be influenced by a number of speeches from European Central Bank policymakers tomorrow, particularly if they offer some insight into the bank’s future monetary policy.
Furthermore, the EUR/USD pairing is likely to remain susceptible to Russia-Ukraine developments.