Quick Recovery for a Short Fall

The EUR/USD trading pair is set on the trajectory of a rapid recovery towards the 1.1050 zones after it hit a fresh 2022 low point at 1.1010 in the early hours of Friday.

EUR/USD price chart. Source TradingView

The leading trading pair experienced some intense selling pressure when news broke that the largest nuclear power plant in Europe, which sits in Ukraine, had been hit by Russian missiles. Situated specifically in Zaporizhzhia, the nuclear plant is just a few kilometers away from Enerhodar.

Fears of a radiation risk began to filter into the markets when there were reports of a fire within the nuclear plant facility as a result of shelling from Russian troops. The market’s risk sentiment was seriously affected as the S&P 500 Futures went down by 1.33% at a point and the US dollar index leapt to the highest level it has seen since the middle of 2020 at 98.08. The EUR/USD pair consequently crashed to a near 1.100 psychological point.

Though calming statements from the International Atomic Agency and the Ukrainian government that there were no nuclear reactions led to a quick recovery of the downward trend, there were actually no reports of radiation changes around the nuclear power plant at Zaporizhzhia. According to the head of the Zaporizhzhia Regional Administration, he said there is an assurance of the nuclear safety of the environment.

A Wakeup Call to Europeans

The Ukrainian president, Volodymyr Zelensky, has called on all Europeans to take action as the nuclear plant was attacked by Russian forces. He said in his speech early on Friday that Europeans should wake up and tell their politicians that Russian troops have shot at a nuclear power plant. Analysts have said that the statement has the potential of staring up political agitations across the continent.

Investors are seeking refuge desperately in the ten-year benchmark of the US Treasury bond yields that is down by 2.5% at 1.799.S

The risk-aversion sentiments flow subsided based on the statements above that offered some relief to the main currencies while the safe-haven US dollar and the S&P 500 Futures recovered every gain they had lost within the few hours of confusion about the nuclear reality. At the time of putting this together, the pair was trading at 1.1038, only down by 0.23% on the daily trade.

Going forward, the events related to the Russian and Ukrainian conflict will continue to drive market forces for the foreseeable future as traders are eagerly waiting for the Non-farm Payroll report for new US dollar valuations.