The single European currency is under mild pressure during the first day of the week, but there are no signs of a collapse.
After the impressive rise in November, the single European currency has retreated in recent days from the highs of 1.1017 and the scenario of December with the same picture gathers quite small chances.
The general picture of the market remains the same and most of the bets continue to be monopolized by inflation in the two main economies and the outlook for the path of key interest rates.
Last week’s evidence of further easing of inflationary pressures in the Euro-Zone has weighed on the European currency.
The exchange rate has corrected more than 150 basis points and the behavior of digesting the levels of 1.08 – 1.10 is a scenario that can be observed in the coming days.
Today’s agenda is quite rich in statements from European Central Bank officials, with President Lagarde standing out.
No surprises are expected in the statements and the rhetoric maintained by the European Central Bank lately would be difficult to change.
The latest data on the containment of inflationary pressures in the Eurozone brings closer the possibility of a rate cut in the first quarter of 2024, but certainly fresher data will be needed for better conclusions.
Although I missed the opportunity to position myself in favor of the US dollar at the 1.10 level as I was expecting a bit higher prices, I will not change my mind and I remain on hold for now as I believe that before the next big move the market will digest the levels it is at now.
And let’s not forget that this week ends with the announcement of new jobs in the United States, which traditionally creates a lot of volatility in the exchange rate if there is a surprise.