EUR/USD rallies towards 1.11 the figure as risk appetite surges

• EUR/USD rallies towards 1.11 the figure as risk appetite jumps. 
• The ECB is eyed while traders are hopeful of a solution to the Ukraine crisis.

EUR/USD is higher by 1.63% at the time of writing after rallying from a low of 1.0890 to print a high of 1.1091. Markets react to the hopes for a shift toward a solution and Ukraine and the single currency is making their advance ahead of this week's central bank meeting. The euro is also supported by reports that the European Union was discussing joint bond issuance to finance energy and defence spending.

There are hints this week that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky may be tentatively opening themselves to compromises that might halt the 12-day-old war. Meanwhile, the European Central Bank meets on Thursday but amid the spectre of stagflation, money markets expected policymakers to delay rate hikes until late in the year. 

Risk appetite has returned to forex and markets in general while commodity prices eased. Additionally, against a basket of currencies including the euro, the US dollar (DXY) is down 1.22% to 97.889, after hitting a 22-month peak on Monday. The pull-back in commodity prices that have contributed to surging inflation and added to uncertainty around economic growth expectations is helping risk to recover as well. 

Brent crude was down 12.8%, at $112.97 a barrel, after earlier falling to as low as $105.91, while US West Texas Intermediate fell 16/18%, to $103.98, both dropping from their highest since 2008. Investors have taken the view that the US ban on Russian oil will not worsen a supply shock.

Additionally, the International Energy Agency said the agency could further tap oil stocks. The UAE's talk of increased production is also hitting oil. Easing oil prices have helped both European and Wall Street's main stock indexes to end and open sharply higher respectively on Wednesday, with investors snapping up stocks hammered by concerns over Western sanctions on Russia.