EUR/USD: Dollar in the spotlight but the consolidation mode still in play
|The single European currency remains under pressure for a fourth consecutive day as the dust from developments in France has yet to settle with the risks of geopolitical turmoil looming over the eurozone.
At present, there seems to be no way out of the situation in which the French political scene has found itself, and the risk of presidential elections with President Macron being challenged remains high.
Without significant changes in the broader macroeconomic environment, the latest developments in the Europe have certainly negatively affected the European currency, with the level of 1.16 being marginally below the challenge and the space for further gains for the US dollar being open.
The announcement last night of the Minutes from the last Fed meeting did not hold any surprises, but the important thing that emerged was that several members of the board maintain their concerns about inflation, something that has not taken the next two interest rate cuts from the Fed off the table, but has increased the question marks about what will come next.
Political developments in France have for the time being overshadowed the issue of the temporary shutdown of the US government as Congress refuses to ratify the new budget and many public services are not functioning, resulting in many statistical data that the Fed is closely monitoring being unavailable at this time.
Today's agenda is a storm of speeches by Fed officials, with Chairman Powell's speech standing out.
I will maintain the same thoughts as those expressed in recent articles. I remain quite cautious in the scenario of a strong upward wave of the European currency on which several large investment houses have bet, giving increased probability to the consolidation's mode scenario near the levels we are at for the very near future.
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