The Good Week Continues

The EUR/USD currency pair is holding on tightly to the rebound it opened the new week with, in order to have renewals of its daily highs in the vicinity of 1.0980 going up by 0.33% on the intraday in the course of the early European session on Tuesday.

The recent run-up of the pair might be connected with the United States dollar drawback when hopes filtered in of resolving the Russia-Ukraine conflict by May. While on that achievement, the global leading pair overlooked stronger US Treasury bonds yields, while there are increasing COVID cases in China.

EUR/USD price chart. Source TradingView

Comments coming from Oleksiy Arestovych, a Presidential Advisor to the President of Ukraine, Volodymyr Zelenskyy, giving signals to a possible end of the ongoing conflict with Russia by May gave a fresh impetus to a risk-on mood on Tuesday. 

The new disposition to finding a lasting solution also received huge support from Senator Marco Rubio of the US Senate when he said that it is apparent that Russia lacks the manpower and morale to capture Kyiv as things are. This suggests that there will be a sooner end to the political tensions than expected. But news about cruise missiles hitting Kyiv appears to pose a challenge to the easing market sentiments and the EUR/USD buyers as well. 

How Safe are We Against COVID?

Another factor negatively affecting risk is the increasing rate of COVID cases in China that has necessitated new lockdowns in many Chinese cities, some close to the nation’s capital, Beijing. Reuters has reported China’s national health authority saying that there are up to 3,602 reported cases in Mainland China as of the 14th of March, in contrast to 1,437 the previous day.

It should be noted that the European Commission further raised sanctions on Russia on Monday even though Russia indicated its interest in paying Eurobond coupons, but either in their Russian rubles or the Chinese yuan. In the meantime, the US has warned that China might be providing military assistance to Russia.

Against the foregoing background, the money market is maintaining a cautious disposition, although optimistic, while the equity futures from Europe and the United States are printing little gains. The US Treasury bond yields, however, renewed to the highest point they had been since 2019. The US dollar index on another was not able to cheer the stronger bond yields or maintain hope for EUR/USD sellers as they look forward to major events.