Global Currency Markets React as Europe Leads New Ukraine Peace Effort
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Foreign Exchange Report
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On Monday, the Euro bounced back from a 2.5-week low against the US Dollar, and the Pound also gained ground as Europe took the lead in a renewed effort for peace in Ukraine. The single currency rose 0.4% to $1.0417 in the afternoon session in Asia, recovering from Friday’s low of $1.0360, which followed a tense meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy at the Oval Office.
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Looking ahead, the European Central Bank (ECB) is expected to announce a 25-basis-point interest rate cut at its meeting on Thursday. The key focus will be on how the ECB responds to renewed signs of disinflation in Germany, France, and Spain, which could signal room for further interest rate cuts beyond March, according to Pound Sterling Live. However, if the ECB indicates growing confidence in inflation control and suggests the economy still requires lower interest rates for support, the Euro could come under pressure.
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Regarding Sterling, following the Trump-Zelenskyy meeting, Zelenskyy was warmly received in the UK, and Prime Minister Keir Starmer announced on Sunday that European leaders had agreed to create a peace plan to present to Washington. As a result, Sterling rose 0.2% to $1.2604. “European momentum towards a Ukraine deal” is boosting the Euro, according to Tapas Strickland, head of market economics at National Australia Bank.
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Additionally, Chris Turner, chief FX analyst at ING Bank, stated: “Certainly, the UK is less exposed to tariffs than its European counterparts. It is hard to argue against EUR/GBP testing major lows at 0.8225 this week.”
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Elsewhere, the Australian and New Zealand Dollars, which Strickland referred to as “the whipping boys for global risk,” are recovering from one-month lows. The Australian Dollar increased 0.2% to $0.6219, while the New Zealand Dollar gained 0.1% to $0.5602, according to Reuters.
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In Japan, the Yen rose 0.1% to 150.46 per Dollar. Meanwhile, the Canadian Dollar and Mexican Peso both edged up approximately 0.2%, reaching C$1.4443 and 20.49 Pesos per US Dollar, respectively.
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The US Dollar Index, which tracks the currency against six major peers, slipped 0.1% to 107.21 at the time of writing. However, analysts at the Commonwealth Bank of Australia forecast the Greenback to continue its rally this week. “The trade war is intensifying. ‘Peak tariff’ has not yet been reached,” they said in a client note.
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Furthermore, in India, the Rupee was trading at 87.3600 against the US Dollar at the time of writing. It is currently the second-worst performing major Asian currency year-to-date, ahead only of the Indonesian Rupiah.
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