EURUSD falls dramatically below 1.0950 as international tensions rise.
The EURUSD pair has fallen below the critical support level of 1.0950. As market sentiment has turned risk-averse amid rising Middle East tensions. The main currency pair has taken a beating as demand for safe haven assets has increased dramatically.
Fears of escalating crises in the Middle East region have increased the appeal of safe havens.
S&P500 futures are down significantly in the late European session. Signaling a substantial decrease in market participants’ risk appetite. Fears of escalation in the Middle East region following US airstrikes on Iran backed Houthi rebels in reprisal for bombing. Iran On commercial oil exports from the Red Sea, market sentiment has dipped.
The US Dollar Index (DXY) has risen dramatically above 102.50. Aided by persistently increasing US inflation and geopolitical worries. In the United States, headline inflation rose substantially in December. Owing to rising rental and healthcare costs. While betting on the Federal Reserve (Fed) cutting interest rates in March remain strong.
According to the CME Fedwatch tool, the probability of a 25 basis point (bps) rate drop in March are somewhat more than 68%.
Meanwhile, investors are anticipating the release of the December US Producer Price Index (PPI) data at 13:30 GMT. The annual headline PPI is expected to rise by 1.3%, up from 0.9% in November. In the same way, During the time, core PPI, which includes volatile food and oil prices, is expected to fall to 1.9% from 2.0%.
ECB is under no obligation to hike interest rates further.
In the Eurozone, European Central Bank (ECB) President Christine Lagarde has declared that the central bank’s interest rate hikes are complete. She said that the worst of inflation is behind us, but rate cuts are on the way if the central bank is certain that inflation will fall below 2%. When asked about economic contraction, Lagarde stated that the Eurozone is not in an official recession.
