Euro stumbles as alleged Russian atrocities raise doubts over peace talks

The euro retreated on Monday amidst fresh doubts over a potential negotiated end to the war in Ukraine.

Meanwhile, trade in the pound is mixed this morning, with GBP/EUR stable at €1.1954 and GBP/USD buoyed at $1.3135. GBP/CAD is rangebound at C$1.6360, while GBP/AUD and GBP/NZD plummet to AU$1.7210 and NZ$1.8763, respectively.

Coming up, will events in Ukraine continue to infuse volatility into the pound, euro and US dollar today?

What’s been happening?

The euro got off to a poor start this week, as evidence of alleged atrocities performed by Russian troops in the Ukrainian town of Bucha began to emerge.

The news cast fresh doubt over the peace process, with Ukrainian President Volodymyr Zelenskiy, suggesting it would be ‘hard’ to negotiate with Russia now the country is aware of the scale of atrocities committed against the civilian population.

EUR investors were further rattled by reports EU leaders were mulling new sanctions against Russia.

The pound weakened during yesterday’s European trading session, with the currency facing pressure amid ongoing concerns over the UK’s cost of living crisis.

The US dollar, meanwhile, was bolstered on Monday in response to rising US Treasury yields. The latest uptick in yields follows some hawkish commentary from Federal Reserve policymakers over the weekend.

What’s coming up?

Looking ahead, its likely that events in Ukraine will remain a key focus today, potentially infusing more volatility into the currency market in the process.

In terms of data, the most high-impact release will be the ISM non-manufacturing PMI. March’s figures are expected to report activity in the US service sector accelerated, potentially underpinning the US dollar.

Also influencing USD exchange rates will be a series of speeches by Fed policymakers. A broadly hawkish consensus could further bolster the ‘greenback’.

In the meantime, March’s finalised services PMI could offer some support to the pound this morning as it looks set to confirm the UK’s services sector expanded at its fastest pace in nine months.

On the other hand, the Eurozone’s own services PMI looks set to confirm a slowdown in service sector activity last month, potentially adding to the pressure on the euro.