Risk-on Sentiment Persists on Thursday

Recently, Alexander Fomin, Russia's deputy minister of defense, said that to "increase mutual trust, and create the necessary conditions for future negotiations to agree and sign a peace deal with Ukraine," Moscow would "dramatically reduce military activities in the direction of Kyiv and Chernihiv, several times over," according to Russian news agency Tass.

"The conflict may be moving to a more localized phase with some of the more extreme tail risk scenarios reducing in probability," analysts at JPMorgan said on Wednesday in a note where they also recommended buying EUR/USD.

Today, the euro rose to one-month highs trading at around 1.1170 during the EU session. The pair is now hitting the critical resistance in the 1.1180-1.12 level. If it jumps above it, the medium-term trend could change to bullish.

However, considering the massive divergence between US and EU monetary policies, it is hard to imagine any meaningful rally in the EURUSD pair. 

In other news, the US administration is working on a plan to release over the coming months up to 180 million barrels of oil from its Strategic Petroleum Reserve (about 1mln per day) in an attempt to limit the recent sharp rise in prices. The plan might be revealed later today. It would be the third attempt of the US to try to control oil prices via the release of reserves. The WTI oil fell 5% after the news. 

Later today, the usual Thursday's jobless claims are due, along with the US personal spending and income data. More importantly, the Fed's preferred inflation gauge, the PCE Price Index, will be released for February. According to this measure, inflation is expected to continue surging, likely printing 6.7% year-on-year, up from 6.1% in January. In addition, the core PCE inflation is seen rising from 5.2% to 5.5%/