The single European currency is under mild pressure as yesterday’s German inflation data and a little earlier French inflation data show that efforts to combat inflationary pressures in the EU are paying off and the market is starting to bet on the prospect of the European Central Bank cutting interest rates sooner than previously expected.
In any case, the announcement on the path of collective inflation in the euro zone, which is expected shortly thereafter, will provide clearer signals and may create further room for pressure on the European currency or abruptly change direction.
As I have repeatedly mentioned, inflation and the interest rate levels of the two main central banks continue to monopolize interest rates and remain the main catalysts affecting the exchange rate.
The common line of both central banks is the same, as they continue to defend the motto that any decision and development of the path of key interest rates depends on the data.
Of course, we should not forget that the American economy continues to have a better pace than the European one, which was also seen in yesterday’s announcement, where the growth path of the US economy pleasantly surprised as it was above estimates.
If the upcoming announcements on the progress of the US labor sector show that it remains at a good level and the consumption sector does not decline, I would see it difficult for the European currency to continue the upward momentum of the last few days.
Today’s agenda is very busy and if there are any surprises, we can expect high volatility.
In any case, I am still thinking about buying the dollar on new highs, as the temporary rise above 1.10 was an opportunity that I could not take.