The euro benefits from renewed optimism on the situation in Ukraine while waiting for inflation
EUR/USD rallied higher on Tuesday on the back of progress in the peace talks between Ukraine and Russia. The head of the Russian delegation and representative of the Kremlin, Vladimir Medinski, reported “substantial discussions” and said that the “clear” proposals from kyiv would be “studied very soon and submitted to President” Vladimir Putin. He estimated that a summit between the latter and his counterpart Volodymyr Zelensky would be possible in the event of an agreement – a request from kyiv that Moscow had always dismissed.
Ukraine’s chief negotiator, David Arakhamia, shared the optimism, saying the results of the meeting were “sufficient” to consider a meeting between Vladimir Putin and Volodymyr Zelensky. The negotiators, however, are asking for an “international agreement” guaranteeing the security of the country.
Traders are now expected to focus on Eurozone inflation numbers pending Vladimir Putin’s decision on kyiv’s proposals. German inflation is expected at 6.3% year-on-year this Wednesday at 2 p.m., French and Italian inflation is expected at 4.3% and 6.4% on Thursday and eurozone inflation is expected at 6 6% on Friday, a rate that would be unprecedented. Higher than expected inflation rates would increase pressure on the ECB to tighten monetary policy and should therefore support the euro.