Stock markets traded slightly lower during the EU session on Wednesday, following yesterday's decline, as it looks like the recent rally might be running out of steam.

At the same time, US yields have picked up some upward momentum, helping the USD recover some of its recent losses. As a result, the USDJPY pair returned toward the critical 130 level.

EU finally agrees on an oil embargo

Representatives from the EU have achieved an agreement on the sixth package of sanctions against Russia. By the end of the year, they agreed to block 90% of the country's oil imports. According to Charles Michel, president of the European Council, the action would instantly affect 75% of Russian oil imports.

Individual asset freezes and travel bans are also part of the sanctions, as is the exclusion of Sberbank, Russia's largest bank, from the SWIFT system. Finally, leaders decided to grant Ukraine a 9 billion EUR tranche of aid to help the country's economy recover from the war.

Meanwhile. the WTI oil benchmark touched the 120 USD level amid headlines suggesting that OPEC members are considering exempting Russia from their oil output agreement.

Later today, the US ISM manufacturing survey for May is due, predicted to tick lower from 55.4 to 54.5. However, the prices paid subindex, aka the inflation gauge, will likely continue trending higher. At the same time, the JOLTS job openings will be released.

Additionally, the Bank of Canada will deliver a 50bps rate hike, bringing the primary rate to 1.5%. That move could impact the USDCAD pair, most likely to the downside.

Furthermore, several FOMC and ECB speakers will be hitting the wires, likely causing some market volatility. Last but not least, the Fed's beige book is on the agenda, along with US total vehicle sales.