EURUSD fell sharply yesterday afternoon amid escalating geopolitical tensions. As reported by economists commerzbankthe euro is more vulnerable than the dollar to an escalation of the conflict.
Escalation of the conflict in Ukraine?
“Fears of an escalation of the Ukrainian war following the report of suspected Russian missile attacks in Poland near the Ukrainian border weighed on the euro. However, I would attribute the market reaction less to the ‘haven-haven’ function “of the dollar, as can be read everywhere, but rather to the fact that the euro zone, and therefore the euro, would suffer more from an escalation than the United States or the dollar.”
“Due to sheer geographic proximity, Russia’s trade with Europe is more intense than with the US, which means that trade embargoes also have a bigger impact on the European economy. To some extent, European companies may already have started voluntarily switching suppliers. However, the market is likely to see the risk of further supply chain issues if imports from Russia are stopped altogether.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
