EUR/USD: Nothing new on the table, Euro remains close to 1.0700 pending critical macroeconomic news
|For the sixth consecutive day the exchange rate remains in a narrow range of fluctuation near the level of 1,07 with the European currency receiving some pressure but so far defending the level as although it has temporarily retreated below this, very soon recovered.
The landscape remains cloudy with investors avoiding big bets and although the interest rate differential clearly favors the US currency they seem quite wary of taking large positions in favor of the US currency as several estimates are on the table that towards the second half of the year and especially towards at the end of the year the European currency may move well above the 1,10 level.
I would give good odds to such a scenario and for that reason I too avoid positioning in favor of the US currency at these levels even though there clearly seems to be room for further gains for the US currency.
No any changes in bets on rate cut outlook from ECB and Fed. As for Fed several views speak of one or two cuts by the end of the year with the one and only cut currently garnering the best chances.
From the ECB side same rhetoric remains on the table that any decision depends on the data with three cuts by the end of the year including the reduction carried out at the beginning of the month remains a scenario with a good chance.
Today's agenda is quite rich with announcements of preliminary data on the course of the services and manufacturing sectors in the Eurozone and the United States.
Some surprise could affect the exchange rate and see increased volatility on the last day of the week.
No change in my thinking, I remain on hold and would like levels near 1,06 or below for the prospect of buying the Euro.
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