Against the background of an almost empty economic calendar, the EUR/USD pair froze in place. During the Asian session on Monday, the bears were able to reduce the price by almost 30 points (from the opening price), but already during the European session, the southern dynamics stalled. The pair is calm, although the degree of heat in the markets is still high. The current information flow does not contribute to reducing anti-risk sentiment, so such apathetic behavior of the pair does not look quite logical.
So, today's round of negotiations between Russia and Ukraine again ended in nothing: the parties only stated the fact of its holding and clarified that work in subgroups is currently continuing. On the one hand, the probability of any significant (final) breakthrough was initially minimal, given the previous rhetoric of the representatives of the delegations. In particular, on Friday, Ukrainian representatives said that the negotiation process could drag on "for several weeks." On the other hand, market participants remained somewhat optimistic, relying on earlier statements of the negotiators (in particular, that they managed to get closer on some points of the general agreement). This optimism has not been justified. Due to the absence of any result, the dollar remained "afloat", and in pair with the euro exerted even a little pressure, continuing Friday's dynamics.
The general fundamental picture was supplemented by the comments of Vladimir Putin's press secretary Dmitry Peskov. Assessing the prospects of a possible meeting between the President of Ukraine and the President of Russia, he said that they have "nothing to fix" yet, because "there are no relevant agreements." In this context, he added that at the moment, "the degree of progress in the negotiations is not what we would like, and not as required by the dynamics of the situation for the Ukrainian side."
It should be noted here that talking about the prospects of the EUR/USD pair in the context of the development of the geopolitical situation is a very thankless task. Negotiations between Russia and Ukraine may indeed drag on for several weeks, or they may end in the very near future. Nevertheless, it is impossible to talk about any other fundamental factors now in the context of the EUR/USD pair (except for the prospects for the monetary policy of the Fed and the ECB) - the focus is only on geopolitics.
By and large, traders cannot decide on the vector of the dollar's movement (including in pairs with the euro) due to the current information vacuum. The market is content with contradictory signals that do not allow us to put together the overall picture - neither in favor of a safe dollar nor in favor of risky assets. A kind of ping-pong takes place: at first, certain information about the course of negotiations appears in the media, which is then refuted, or too ornate, veiled, and partially confirmed by officials. For example, the recent information of the Financial Times newspaper was not confirmed (or rather, partially confirmed, without disclosing details) by official sources. Although this publication allowed EUR/USD buyers to go on the counteroffensive. Official denials lowered the pair's bulls "from heaven to earth."
Thus, the foreign exchange market is still waiting. The longer this expectation lasts, the more chances dollar bulls have to increase their pressure throughout the market. In this sense, time plays in favor of the greenback.
Also, the US currency continues to be in high demand due to the hawkish comments of the Fed representatives. Last week, the hawkish theses were voiced by Christopher Waller and Neel Kashkari, today they were joined by Jerome Powell, Thomas Barkin, and Raphael Bostic. The essence of their speeches boils down to the fact that the regulator can (should) tighten monetary policy more aggressively - the need for a 50-point rate hike was stated, in particular, by Waller and Barkin. The European Central Bank, in turn, continues to take a "restrained-soft" position. For example, today Christine Lagarde did not answer journalists' questions about the prospects of monetary policy. But at the same time, she stressed that "in any case, the pace of tightening of monetary policy parameters in the future will not be as fast as in the United States." Let me remind you that following the results of the ECB's March meeting, the members of the Governing Council made it clear that the regulator would not "automatically" raise the rate after the end of QE.
Thus, the prevailing fundamental picture of the pair speaks primarily about uncertainty. Negotiations between Russia and Ukraine are continuing, but the information vacuum around this process has shackled the EUR/USD pair. Neither the bulls nor the bears of the pair dare to go on the offensive. Therefore, at the moment, traders should take a wait-and-see position.
From a technical point of view, the pair on the D1 timeframe continues to be between the middle and lower lines of the Bollinger Bands indicator, under the Kumo cloud, but above the Tenkan-sen line. To confirm the ambitions of the upward movement, buyers need to overcome the Kijun-sen line - that is, to gain a foothold above the 1.1150 mark. The main (so far) goal of the southern movement is the 1.0900 mark - this level of support has been "holding the line" since March 9, that is, for the second week. The resumption of the southern trend will be signaled by a decrease in the price below the 1.0990 mark (the Tenkan-sen line on the same timeframe). In this case, the Ichimoku indicator will form a bearish "Line Parade" signal.