EUR/USD struggles to fill 100-pip gap under 1.1200 even as Russia, Ukraine agree for talks

• EUR/USD licks its wounds after a negative start to the week.
• Hopes of peace regain as Russia-Ukraine negotiations will be held near Belarus-Ukraine border.
• Moscow’s high alert to nuclear stations, Western sanctions on Russia keep traders on their toes.
• Risk catalysts keep the driver’s seat, second-tier US data may offer intermediate moves.

EUR/USD consolidates intraday losses around 1.1180, following a week-start downside gap of nearly 100-pips. The major currency pair refreshed yearly low and also marked a three-week downtrend during the last week as Russia invaded Ukraine.

The risk-aversion wave got intense during the weekend as the West united against Moscow and pushed some of the Russian banks out of the SWIFT global financial settlement system, also levied sanctions on Russia’s central bank. On the same line was the news that Russian President Vladimir Putin puts nuclear deterrence forces on high alert.

On the positive side, headlines conveying the Ukraine-Russia peace talks, at the Belarus-Ukrainian border, may have probed the EUR/USD bears. However, the latest comments from European Commission President Ursula von der Leyen seemed to have challenged the market’s cautious optimism. The regional leader recently said to the EU News that the European Union (EU) wants Ukraine in the bloc while also adding, “They’re one of us.”

Amid these plays, the S&P 500 Futures drop around 2.0% while the US 10-year Treasury yields mark a nine-pip fall near 1.90% by the press time.

It’s worth noting that the US Dollar Index (DXY) may have further upside to track if the Kyiv-Moscow talks fail, which in turn could direct EUR/USD towards a fresh 2022 low.

That said, US trade numbers for January and Chicago Purchasing Managers’ Index for February to decorate the calendar for short-term directions.

Technical analysis

Unless crossing a 12-day-old resistance line, around 1.1300 by the press time, EUR/USD bears keep reins.