EUR/USD remains below 1.0600 amid safe-haven flows, awaits ECB Lagarde's speech

EUR/USD faces challenges due to safe-haven flows amid escalating Russia-Ukraine conflict.

Traders anticipate that the incoming Trump administration's pro-inflationary policies could support the US Dollar.

The Euro weakened due to fears over potential US trade tariffs' impact on Eurozone growth.

EUR/USD remains subdued as the US Dollar (USD) appreciates, possibly driven by the safe-haven flows amid escalating tensions in the Russia-Ukraine conflict. According to a Reuters report late Tuesday, Ukraine deployed US-supplied ATACMS missiles to strike Russian territory for the first time, signaling a significant escalation on the 1,000th day of the conflict. The EUR/USD pair trades around 1.0590 during the Asian trading hours on Wednesday.

In response, Russian President Vladimir Putin broadened Russia’s nuclear policy to include the possibility of nuclear retaliation in response to significant conventional assaults. However, market anxieties lessened somewhat when Russian Foreign Minister Sergei Lavrov reassured that the government would take all necessary measures to avert a nuclear war.

The EUR/USD received downward pressure as the Euro weakened to an over-one-year low of $1.0496 hit last week, as concerns over potential US trade tariffs' impact on Eurozone growth. Additionally, the US Dollar (USD) receives support from investors’ expectations of pro-inflationary policies from the incoming Trump administration. These policies could drive up inflation, potentially prompting the Federal Reserve to slow the pace of rate cuts.