EUR/USD: Euro at 1.0800 level on ECB's day with ''short squeeze'' still in play

The single European currency remains in the spotlight, having already secured the level of 1.08 after an amazing three-day period with strong upward momentum.

The disruption caused by President Donald Trump with an impending fairly tough trade war combined with the possible change of policy in the Eurozone regarding debt and deficits have significantly changed the picture of the game with the European currency having found the opportunity to make significant gains.

However, the probability that this cycle of strong upward trend is at an end is quite high and since yesterday I have maintained a position in favor of the US dollar at the threshold of 1.08.

Let's not forget that the important catalysts that have influenced the European currency in recent months have not been removed from the agenda.

If we exclude the significant developments on the Ukrainian front, where there are several possibilities of an optimistic outcome with an end to the war, some of  the  barriers that have weighed on the European currency remain.

The increase in spending in the European Union towards the defense sector, on the one hand, may provide some impetus in terms of consumption and the industrial sector, but this can hardly justify sustainable and stable growth.

While the interest rate differential gap in favor of the US currency, although it may not widen significantly further, will be difficult to narrow, something that remains one of the strong advantages of the US dollar.

Today's agenda is dominated by the European Central Bank meeting, where the decision to cut key interest rates by 25 basis points is fully expected and any surprise will be a shock to the markets.

I believe that the upward momentum of the European currency of the last three days will soon be challenged and signs of fatigue will appear. 

While the ''short squeeze'' phenomenon which has an additional effect on the sharp rise of the euro is likely to be off the agenda soon.

For now, I maintain my position in favor of the US currency, expecting a correction