EUR/USD: Trade calm before the storm?
|The common European currency remains trading near 0,97 levels in an extremely tight trading range as investors keenly await the announcement later in the day the path of inflation in the United States .
For the third day in a row, the pair is unable to regain any direction and a potential surprise in the release of US macroeconomic data it is likely to create significant move in one direction or the other .
All the data that weigh on the European currency such as those of the geopolitical instability , the energy crisis and the impending recession are fully known have been sufficiently assimilated by the markets and investors seem extremely wary of taking large positions before the announcement of important macroeconomic news .
As is well known one of the critical points driving the exchange rate lately is the gap that has been created between Fed and Ecb policies in relation to interest rate hikes .
The fairly expected 75 basis points hike from the Fed in the upcoming meeting will maintain this gap while further widening of inflation pressures in the US will pressure the central bank to maintain the hawkish rhetoric and probably bets will starting to appear for possible increase of 100 points .
At the same time, the Ukrainian front maintains the increased geopolitical tension which in turn burdens the climate in the stock markets , However, in the last two days we have not seen these pressures expand significantly and already the main indicators shows signs of stabilization .
After a subdued trade over the past three days it is very likely that the data release later today will increase volatility and we will see some critical levels to broken either to the downside or to the upside depending on the announcements.
On this basis I see no significant reason to change the basic strategy to buy the euro at new dips , as the upside reactions of the pair maintains excellent fidelity.
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