EUR/USD back to trading flat in 1.1370 area, amid choppy trading conditions as Russia/Ukraine war risk rises

• EUR/USD has been choppy on geopolitical headlines but is back to trading flat on the day in the 1.1370 area.
• Ahead, focus remains heavily on geopolitics, though upcoming US data and ECB/Fed speak will also be of note.

EUR/USD has seen choppy, two-way price action on Thursday, with the pair buffeted by geopolitical headlines. News during the Asia Pacific session of shelling in Eastern Ukraine, with pro-Russia separatists claiming that the Ukrainian military had attacked unprovoked, saw EUR/USD shed nearly 60 pips in a matter of minutes, dropping from the 1.1380 area to lows just above 1.1320. However, subsequent denial by Ukraine, who blamed pro-Russia separatist forces for the shelling, aided EUR/USD to recover back to the upper 1.1300s.

At current levels in the 1.1370s, the pair is back to trading flat on the day, though troubling reports of shelling in Eastern Ukraine and continued Russian military build-up on the border will likely keep the pair on the defensive. Indeed, US and NATO leaders, government officials and intelligence community leaders continue to sound the alarm that Russia remains ready to launch an invasion at little to no warning. For now, EUR/USD bulls may have a tough time pushing the pair above weekly highs just under the 1.1400 level. Aside from geopolitics, EUR/USD are also focused on ECB/Fed rhetoric, with policymakers having spoken recently and scheduled to orate on Thursday and Friday.

Wednesday’s Fed minutes, which were seen as somewhat stale by many investors given recent inflation surprises since the last policy meeting, did not contain any hawkish bombshells, market commentators noted, which undermined the US dollar slightly at the time. Attention now turns to commentary from ECB Chief Economist Philip Lane at 1400GMT following what investors interpreted as dovish remarks from ECB’s Pablo de Cos earlier in the session, as well as and Fed’s James Bullard and Loretta Mester at 1600GMT and 2200GMT respectively. Before more central bank rhetoric, investors will be keeping an eye on the release of US weekly jobless claims and Philadelphia Fed manufacturing survey data at 1330GMT.