Euro Gets Hammered as War Burns Risk Appetite

The Euro has found itself to be rather volatile and negative during the trading session as we have sliced through the 1.12 handle. This is not a huge surprise, because quite frankly the market has to price in the idea of a shooting war in the European region. If that is going to in fact continue, this is going to decimate the Euro which quite frankly was standing on fairly flimsy support underneath for a while. After all, the economic numbers coming out of the European Union do not exactly scream growth, and at the same time the European Central Bank has suggested that they are nowhere near tightening monetary policy, while the Federal Reserve is on the other side of that equation in looking to do exactly the same thing.

EUR/USD Video 25.02.22

If we can break down below the recent lows near the 1.1150 level, that opens up the idea of the market dropping to the 1.10 level underneath. The size of the candlestick is rather impressive, and that does suggest that we probably have quite a bit of follow-through coming, but we may get the occasional bounce along the way. Though short-term bounces will almost certainly be opportunities to fade rallies yet again.

I simply do not see the argument for getting bullish unless of course the Russians decide to de-escalate the entire situation. At this point, it is more about fear than anything fundamental, but we were already setting up to perhaps drop anyway. The attack on Ukraine has simply accelerated that process. I have no interest in buying the Euro until tensions disappear, something that do not look likely in the short term.

For a look at all of today’s economic events, check out our economic calendar.