Dollar keeps its footing to start the week

The greenback preserves its strength to start the week as investors assess the latest developments surrounding the Russia-Ukraine crisis. The US Dollar Index, which registered gains for the fifth straight time last week, is up modestly near 99.00 early Monday and market participants are likely to remain focused on geopolitical headlines in the absence of high-tier macroeconomic data releases.

Over the weekend, officials from Russia and Ukraine sounded optimistic about an agreement. Ukrainian negotiator and presidential adviser Mykhailo Podolyak said on Sunday that Russia was talking constructively and added that they could achieve some results in a matter of days. On a similar note, Russian delegate Leonid Slutsky said that talks made substantial progress. The next round of talks, via a video conference, is expected to start at 0830 GMT on Monday.

Meanwhile, markets remain cautious on reports of Russian airstrikes hitting a large military base near Lviv. According to the UK’s Ministry of Defence, Russian troops are trying to “envelop” Ukrainian forces in the east of Ukraine. Furthermore, news of China locking down Shenzen on the surging number of coronavirus cases is also weighing on sentiment. Later in the day, US and China will reportedly hold high-level, in-person talks. Nevertheless, US stock index futures are up between 0.3% and 0.6% heading into the European session and the 10-year US Treasury bond yield is up more than 2% on the day at 2.04%.

EUR/USD started the new week with a bullish gap but lost its momentum. The pair is fluctuating in a relatively tight range above 1.0900 early Monday.

GBP/USD seems to have gone into a consolidation phase after touching its lowest level since November 2020 at 1.3010 during the Asian trading hours.

Gold stays under bearish pressure at the beginning of the week and trades deep in negative territory below $1,980. Rising US Treasury bond yields seem to be weighing on the yellow metal on Monday.

USD/JPY is building on last week’s impressive gains and trades at its highest level since January 2017 above 117.50.

Bitcoin is staging a rebound after continuing to edge lower over the weekend but stays below the key $40,000 level. Ethereum is up more than 2% early Monday, trading near $2,600.

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