The single European currency is trying to develop a mild reaction and approach the levels of 1.08 again, awaiting the very important announcements on the course of the consumer inflation in the United States.
Yesterday did not bring any surprises and as expected, the exchange rate was limited to a very narrow trading range around the 1.0750 levels as the agenda was extremely light while investors avoided any big bets ahead of the rest of the week where the landscape remains extremely murky with major announcements and central bank meetings.
Although the European currency has regained its ability to show signs of reaction, there is a risk that the downward momentum of the past few days will continue, especially if higher US inflation figures are released later this afternoon.
While we shouldn’t forget that tomorrow and the day after tomorrow will follow the meetings of the Federal Central Bank of the United States and on Thursday the corresponding European one, and we can’t expect any surprises regarding the level of interest rates, but the interest is focused on the statements of the presidents regarding the thoughts and the prospects for the next steps.
Bets are currently closing strongly in favor of the possibility that the European Central Bank will be the first to cut interest rates.
If this possibility moves further up the agenda, the European currency is expected to remain in doubt and struggle to recapture the bullish momentum of November.
At the same time, however, it appears to be maintaining its strength and a sharp collapse is a low-probability scenario at the moment.
Awaiting major announcements, a wait-and-see attitude is the best thought, but I have begun to put on the table the idea of buying the European currency in the event of a sharp fall much below 1.0700 with a view to a correction.