Inflation jitters are weighing far more heavily on central banks’ thinking now, pressing policymakers to expedite their tightening plans further even if the war in Ukraine threatens to drag the global economy into a recession.

The second most important FOMC board member, Lael Brainard, who is considered a dove, dropped her patient tone late on Tuesday, stating that the Fed could begin the balance sheet reduction at a faster pace than previously expected as soon as in May, while a series of rate hikes could also be delivered more rapidly to cool inflation.

The Fed will not hold a policy meeting this month; therefore, investors will carefully scan the minutes of the March meeting due today at 18:00 GMT for more clarity. Investors have further raised the bets for a rapid 50bps rate increase in May this week and any fresh details on plans to decrease bond holdings could add more fuel to the dollar. Yet, with the central bank having already set the tone for its next policy decision, the greenback could see only limited moves.

Dollar/yen is looking for a close above the key 123.80 resistance again as Treasury yields hit new three-year highs. Wall Street is set to open in the red, with the Nasdaq 100 expected to dive over 1.0%.

Of note, the 10-year Japanese bond yield violated the BoJ’s 0.25% ceiling once again today, reflecting the central bank’s difficulties in effectively implementing its yield curve control.

Turning to Europe, despite the recent hawkish comments from ECB policymakers, who are also eyeing higher rates this year, the battered euro is unable to stand on its feet thanks to the Ukrainian war factor. A new round of sanctions against Moscow will be announced by the US and the EU today after allegations from Ukraine of war crimes against civilians. However, whether the EU will cross a red line and impose a ban on gas imports from Russia as “peace talks” continue is still a big challenge despite growing pressure from its Western allies to move forward.

For now, euro/dollar is struggling to hold above 1.0900 following the slide to a fresh one-month low of 1.0873 earlier today. The French election has surprisingly become another headwind for the common currency lately as President Macron seems to be losing his popularity against his far right rival Le Pen ahead of Sunday’s first round of voting.

Likewise, pound/dollar remains squeezed below its 20-day simple moving average at 1.3078 as the Bank of England’s shift to a more conservative stance on future monetary tightening is blocking the way higher.

European stock markets are in the doldrums as well. The pan-European STOXX 600 is losing around 1.54% so far in the day thanks to the sharp declines in consumer cyclicals and technology. The British FTSE 100 is facing softer injuries, with healthcare stocks and consumer non-cyclicals somewhat offsetting losses in other sectors.

In commodities, natural gas futures have almost reversed their October downtrend, while WTI oil futures remain supported slightly above $100/barrel but are unable to run above $104.54.