EUR/USD bears are moving in with a focus on 1.1305, Russia invasion risk weighing

• EUR/USD bears are moving in from the hourly the 38.2% ratio.
• 1.1305 serves as potential support below current lows. 
• Russia and central bank sentiments are the driving forces. 

EUR/USD is bleeding the initial gains for the day as risk appetite drifts off with the major Asian indexes printing in the red. EUSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.2%, while Japan's Nikkei lost 2.5%. At 1.1353, the euro is now flat on the day to the US dollar after correcting a significant portion of Friday's sell-off to a high in the 1.1369's.

The start of the week is jittery following alarmingly high US inflation readings last week combined with risks of a Russian invasion of Ukraine. US president Joe Biden and Russian president Vladimir Putin talked by phone for an hour on Saturday in what is widely seen as a last-ditch effort to fend off a Russian invasion of Ukraine. The call, however,  brought “no fundamental change” to the worsening crisis although the US and Russia have agreed to stay engaged in the coming days according to a senior US official, briefing reporters. The official also told reporters that ''Russia may decide to proceed with military action anyway.''

Meanwhile, there is speculation that the Federal Reserve might raise rates by a full 50 basis points in March with chatter about an emergency inter-meeting hike. That was spurred in part by the timing of a closed Fed Board meeting for Monday, though the event has been presumed routine. 

However, not all Fed members are singing from the same hymn sheet. While hawk and St. Louis Fed James Bullard advocated for a 50bps hike at the March meeting, San Francisco Fed President Mary Daly played down the need for a half-point move in an interview on Sunday. Daly argued that being too "abrupt and aggressive" on policy could be counter-productive.  Fed President James Bullard will be in focus later on Monday, given his recent calls for a more aggressive stance at the Fed, signifying 100 basis points of tightening by June.

US FOMC minutes / Retail Sales in focus

As for other events in the week, the Federal Open Market Committee meeting minutes will be released and traders will be on the lookout for discussions regarding near-term policy plans. Analysts at TD Securities explained that the market will be paying particular attention to plans for balance sheet normalization steps, following the release of the normalization "principles" in Jan.

''The minutes might seem stale, however, given the recent strength in macro data,'' the analysts added. Markets will then look to US Retail Sales where an improvement on December's sharp decline could be supportive to the US dollar. 

EUR/USD technical analysis

As illustrated, the euro is on the back foot again, capped through the 38.2% ratio, so far, which leaves the emphasis on the downside and prospects of a bearish extension of the broader trend. 1.1305 serves as potential support below current lows.