The European single currency is in corrective mode in the early hours of Wednesday’s trading, as yesterday’s bullish movement appears to be struggling to continue.
Yesterday was a bit of a surprise as the European currency maintained a mild bullish momentum that saw it approach the 1.10 level, but failed to secure it.
Even though the economic agenda did not provide any surprises and the data released yesterday had mixed results, the European currency continued to benefit from the latest Fed rhetoric as it seems that the ”dust has not yet settled”.
Bets have shifted significantly in favor of the possibility that the Federal Reserve will cut interest rates relatively sooner than previously estimated, which is weighing on the Dollar for now, but I still believe that it is too early for such conclusions and that quite fresh macroeconomic data will have to be brought to the table for estimates to be more reliable.
Based on this reasoning, I continue to doubt that the European currency will be able to continue its strong upward trend and easily move to prices well above the 1.10 levels, and if this happens, I believe that buying opportunities of the US currency will arise.
Looking ahead to today’s economic calendar, consumer confidence indicators from the Euro-Zone and the U.S., as well as Existing Home Sales data from the U.S., will stand out.
Barring any surprises that would weigh on the dollar again, there is a good chance that the mild correction in the exchange rate will be sustained.
My basic idea, as expressed in previous articles, is to prefer to buy the US dollar on a sharp spike well above the 1.10 level.