We wrote recently about how the residual risk that remained priced within (FX) markets was increasingly being removed from positioning data. Despite broad doubts about the credibility of claims of progress in Russia-Ukraine peace talks, the market scaled back demand for safe-haven FX, finding comfort in more moderate wholesale energy prices and macroeconomic conditions. More recently, the fact that Russia appears to have distanced itself from demands for settlement in Ruble for energy exports has continued to support risk conditions.
When highlighting the more balanced positioning in markets and more sanguine outlook we also stressed the propensity for complacency to feed into price action. Given that the market had largely discounted the risks of the conflict in Ukraine focussing instead on growth prospects and respective monetary policy outlooks, headlines emanating from the invasion once again hold the power to catch the market off guard.
One such headline and topic that holds the propensity to change the market’s relative calm surrounding the conflict in Ukraine is claims of war crimes. War crimes create and demand huge attention on the international stage. They are therefore significant and powerful catalysts of sanctions which have been a stronger driver of rates within currency markets, far more so than death tolls and geographical advance.
Via its significance to the global political economy and sanctions in turn, the claims and trials against war crimes allegedly committed could therefore reintroduce defensive demand within markets. Alongside technical resistance and price dynamics driven by the development of interest rate differentials, these allegations have undeniably contributed to EURUSD’s sell-off in the past three trading sessions.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – A short lived short squeeze?
Charles Porter
Tue 9 Dec 2025
A short lived short squeeze? Sterling is undoubtedly benefitting from a short squeeze. Traders on net had increased positions that benefit from Sterling’s demise leading into the budget. Depending upon the participant’s persuasion, that could have meant gaining an outright short exposure to the currency or, in a more mild form, trimming any or all […]
Daily Brief – Sterling slides
Charles Porter
Thu 18 Dec 2025
Sterling slides Sterling took a leg lower ahead of the European open yesterday. Despite some tentative signs of recovery, GBP was still unable to claw back losses incurred during yesterday’s session. Before we cover the cause and implications of yesterday’s stumble amongst GBP crosses, let’s look at why the Pound was set up for a […]
Daily Brief – Big day of a big week
Charles Porter
Tue 16 Dec 2025
Big day of a big week Markets have an action-packed week ahead of them. Three G10 central bank decisions will be published, kicking off with the ECB tomorrow. Thursday is the turn of the Bank of England and on Friday, the BoJ. But it’s not just the smattering of pre-Christmas central bank meetings that should […]
