- The Euro has lost some ground against the US dollar after reports that Russian missiles had struck inside the Polish border
- NATO and US authorities are currently investigating the report before commenting publicly
- The Euro is still up against the greenback due to the US PPI coming in softer-than-expected
The Euro has lost some ground against the US dollar after reports that Russian missiles had struck inside the Polish border killing two polish citizens.
The reason for the drop in the Euro is because Poland is a NATO member and the potential results of this, yet unverified report, is a retaliation from Polish and/ or NATO forces. Poland has previously noted that they are ready to defend their sovereignty in the face of accidental or purposeful attacks within its borders which could induce NATO forces to join in on the conflict too. NATO and US authorities are currently investigating the report before commenting publicly. It could be that markets wait for confirmation from these two authorities before considering their risk appetite for the Euro the rest of this week.
The Euro is still up against the greenback but was registering greater gains before the missile report hit the news flow. The reason for the strength in the Euro is due to the US Producer Price Index (PPI), a measure of wholesale inflation, coming in softer-than-expected. October’s PPI rose +0.2% month-over-month in October of 2022, below market forecasts of +0.4% adding fuel to the theory that inflation in the US has peaked and is now slowing. The EUR/USD was heading toward 1.0500 before investors were spooked by the missile report, sending it as low as 1.0280. It has since recovered to close to the 61.8% Fib level between this recent high and low
Previously, the EUR/USD rallied after the release of the US consumer inflation data (on November 11th) which was the first indicator that US inflation has reached its peak. The EUR/USD is still up 2.7% over the week.