EUR/USD: Will be the US jobs data the cause of the correction?
|The single European currency maintains the gains of the last two days and remains above 1,05 level ahead of the very important data on new jobs in the US economy .
The past two days have been particularly favorable for the euro as a set of macroeconomic announcements as well as the Fed Chair's speech create the prospect that the US central bank will slowdown the pace on interest rate hikes .
As early as Tuesday I pointed out that I would give a high chance of a de-escalation of inflationary pressure based mainly on the recent decompression of oil and natural gas prices .
Indeed, the developments confirmed this thought, as well as in the European economy, the latest announcements showed that inflation pressures do remain at high levels, but show some first signs of retreat, while correspondingly in the US , the decline in prices was much more intense , which was the main cause of the recent rally of the European currency .
The widening of the gap in interest rates between Fed and Ecb was the decisive factor that in recent months led the European currency to suffer significant losses and retreat to the levels of 0,95 .
I have repeatedly stated that the market had already digested all these developments, and the expected limitation of this gap as i had previously mentioned several times would lead the exchange rate to return to the levels of 1/1 but also well above it .
The market Indeed in a relatively short period of time it has recovered well above the 1/1 level and already trading near 1,05 but now i will be quite cautious as to whether this upward Momentum can have the same speed in the near future .
In my yesterday's report I noted that there is a significant chance that we will see new tops in the pair which Indeed did happen.
Today's US new jobs announcement will be a determining factor as to whether we will see more bull run in the European currency or a sharp correction if the data is too strong.
Having faithfully followed the strategy of buying the European currency on every dip , which has not disappointed me so far , but at the moment I think that the levels in the current conditions are quite high , so I would not risk a position in favor of the Euro at such prices .
There is some good probability that the US currency will gain ground again .
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