The single European currency continues to be under mild pressure and is currently defending itself to limit further losses.
Yesterday was the sixth day in a row of losses but without these losses taking a large extent and now there are some signs that the strongly downward momentum of the European currency may be near to the end.
Yesterday’s announcement of new home sales in the United States came in below estimates and after quite some time macroeconomic fundamentals from US slightly disappoints.
At the same time we had a small retreat in the yields of the US government debt securities which was not enough to reverse the sentiment in favor of the US currency.
Continued pressures on international stock markets appear to be currently one of the main catalysts strengthening the US currency as general anxiety in financial markets favors the US currency which traditionally functions as a safe haven currency.
The fallout from last week’s Fed meeting and its rhetoric of keeping key interest rates high for a long time remains on the table and acts as a weight on the European currency, but something that may slowly fade and will need new data which will determine the course of the exchange rate.
An expected stabilization in the heavy climate that remains in the international stock markets I expect to play a major role and support a good reaction for the European currency.
Durable Goods Orders in US stand out on today’s agenda and some significant divergence always plays a role in the pair.
While tomorrow’s agenda is much richer with the inflation in Germany and the development path of the US economy, so pending this important news the most likely scenario for today is that the single European currency will remains in a defensive mode and tries to react mildly.
