Τhe single European currency is a breath above the 1,10 level as the geopolitical landscape and recent macroeconomic data released this week have temporarily given the US dollar a boost.
Expectations for another 50 basis point increase from the Fed have been reduced with the scenario of 25 basis points gaining ground.
Τhe European currency challenge remains on the table, the break of the 1,12 level a few days earlier was only a temporary case, fully confirming my thoughts as expressed in previous articles.
For the 7th week in a row the range was between the 1,10 – 1,12 levels and today’s US new jobs announcement is awaited with great interest as if they surprise positively a colapse of 1,10 level looks quite possible.
Despite the dramatic developments in the Middle East, the general picture of the market shows minor differences, with the geopolitical landscape still gathering the interest for the time being, leaving a secondary role to macroeconomic figures.
The fluctuation range between the 1.10 – 1.12 levels that the exchange rate has been in for the last few weeks remains in play, which increases the possibility that very soon we will have a sharp decompression in the pair with significant extensions outside these levels.
I recall that one of the main reasons that the European currency relied on to develop an upward momentum in the previous two months was the doubts about the labor sector in the United States which showed significant signs of contraction with the markets temporarily positioned against the US dollar as they discounted more aggressive policy from the Fed in the path of rates cuts.
A positive surprise in today’s announcement which will significantly exceed estimates is quite likely to act as a trigger and the downtrend of the European currency in recent days will continue with the critical level of 1,10 finally collapsing.
Although I was clearly in favor of the idea of buying the US currency at peaks near level one 1,12 , in the end I failed to find the right entry point and as a result I prefer to stay on hold at these levels, especially ahead of important announcements.
