Europe is the other most affected economy by the sanctions.
Tuesday’s Manufacturing PMI will be kept under radar in the US and Europe.
In the early Asian session Tuesday, EUR/USD traded sluggish as investors waited for new triggers from Russia’s invasion in Ukraine. After a bearish opening gap, the major saw a principal rise Monday as the risk-off impulse kicks into action after the peace talks between Moscow & Kyiv.
Europe’s economic situation has been affected by the geopolitical tensions that have arisen between Russia and Ukraine. Due to sanctions against Russia and likely lower demand, the European economy appears to be in recession. This has resulted in disruption to the oil exports of Europe as it has been disconnected from the SWIFT international bank system.
Not to be overlooked is the fact that Europe imports more than 25% of its oil imports from Russia, and 40% of its natural gas demand. Europe will feel the greatest impact of sanctions against Russia.
Russia’s sanctions are likely to increase Europe’s already high inflation. The European Central Bank will continue to be in dilemma about whether to raise interest rates against rising inflation or to adopt a dovish stance in order to avoid a recession.
The US Dollar Index (DXY), seems to be gaining ground near 96.75 until further updates from Russia-Ukraine war.
Investors will not only be focused on the Russia-Ukraine conflict, but also the Manufacturing Purchasing Managers Index data (PMI), which is due Tuesday from the Institute for Supply Management (ISM), and the Euro Manufacturing Purchasing Managers Index(PMI), which is due from the HIS Markit.
