Forex Today: Markets turn risk averse as Russia attacks nuclear facility, eyes on NFP

Here is what you need to know on Friday, March 4:

Safe-haven flows, once again, took control of markets during the Asian trading hours on Friday after reports showed a fire broke out in a building at a Ukrainian nuclear complex. According to the latest headlines, the fire has been extinguished and there was no indication of elevated radiation levels. Nevertheless, markets remain risk-averse early Friday and the US Dollar Index is trading at its highest level since Mary 2020 near 98.00. Later in the day, January Retail Sales data will be featured in the European docket ahead of the February Nonfarm Payrolls report from the US. 

US Nonfarm Payrolls February Preview:  Fed policy runs through Kyiv.

"Europeans, please wake up. Tell your politicians – Russian troops are shooting at a nuclear power plant in Ukraine," Ukrainian President Volodymyr Zelenskyy said early Friday. With investors seeking refuge, the benchmark 10-year US Treasury bond yield is down 2.5% at 1.799% and US stock index futures are losing between 0.3% and 0.5%.

On the second day of his testimony, FOMC Chairman Jerome Powell repeated that they could consider the option of a 50 basis points rate hike if they fail to control inflation following the first series of rate increases. 

Powell again promises Fed March rate hike, balance sheet reduction.

Pressured by the broad-based dollar strength amid Powell's hawkish tone and the souring market mood, EUR/USD slumped to its weakest level in 22 months near 1.1000. The pair staged a technical correction following the selloff witnessed during the Asian session but continues to trade in negative territory below 1.1030.

GBP/USD stays under modest bearish pressure after posting losses on Thursday but holds above 1.3300 for the time being.

Gold remains one of the most sensitive assets to changes in risk mood. In the Asian trading hours, XAU/USD surged above $1,950 but erased all of its gains to turn flat on the day near $1,935 in the European morning.

US February Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises.

USD/JPY is having a difficult time making a decisive move in either direction on Friday as the JPY finds demand as a safe haven and holds its ground against the dollar. The pair is moving sideways near 115.50.

Bitcoin continues to erase the gains it registered earlier in the week and falls toward $41,000 early Friday. After closing the previous two days in negative territory and losing 5% during that period, Ethereum stays on the back foot and was last seen losing 4% on the day at $2,700.