The Euro has rallied this afternoon after the latest round of Ukraine/Russia peace talks showed some progress.

Today Ukraine have proposed a new security guarantee which potentially increases the chances of them adopting a neutral status (in regards to NATO). It would include not joining NATO and not having any foreign military bases in Ukraine and they would have security guarantors in place to protect the security of the nation (possibly from Israel, Turkey, Canada etc).

Ukraine negotiators have implied that enough progress was made in the talks for an in-person meeting between Putin and Zelensky. Although Russia have not confirmed they agree with this, they have confirmed that the latest talks were “constructive”. Furthermore, Russia have also announced they will severely downsize their military activities around the Kiev area.

As a result, there’s been an increase in market risk appetite which has caused movement out of the USD and into the Euro and other risk currencies. The EUR/USD has risen over 1.2% today and is currently trading at a 12-day high and close to its March high. The GBP/EUR is down 0.75% today and trading at a 12-day low. The GBP/USD has moved 1-cent high today but is only trading around 1% higher than its November 2020 levels.

The market will continue to dissect these talks and look for further comments around a peace deal. More optimism could lead to further USD losses and Euro/GBP gains.