News & analysis

February will be remembered in the history books for its geopolitical events and the predicament they, along with global inflation pressures, placed central banks in. In the early part of the month, shifting policy outlooks by G10 central banks was the main driver of FX price action. This soon changed after reports cited Russian troops entered into Ukraine beyond to Donbas region on the 24th of February. The news prompted a substantial risk-off reaction in markets, with further volatility evident on the final day of the month after more aggressive sanctions were imposed on Russian banks and the Central Bank of Russia by Western nations. Geopolitical events are likely to continue driving FX markets in the near-term and with no clear end game as things stand, our forecasts remain under review.

Our base case scenario at present is that the pace of geopolitical developments slow in March, but recent events result in a material deterioration in Europe’s macroeconomic backdrop and a still tentative risk environment. This leaves EURUSD more vulnerable to further depreciation, and growth risks in the eurozone should support further appreciation in CHF, the regional safe haven, regardless of the overall market risk backdrop. In the rest of the G10 space, commodity currencies like AUD and CAD are likely to buffer any further risk-off bouts due to the offsetting impact of higher commodity prices while any stabilisation in broad risk conditions will likely see these currencies lead gains in the G10 complex.

You can read our March 2022 FX Forecasts report here:



Simon Harvey, Head of FX Analysis
Ima Sammani, FX Market Analyst
Jay Zhao-Murray, FX Market Analyst


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