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EUR/USD: Euro continues to lose ground, falling well below 1.0900 level with room for further loses

The single European currency is under pressure for the second day in a row, having moved well away from its recent high of 1.0955 as signs of fatigue have appeared in play.

The behavior of the exchange rate over the last 2 days has partially confirmed my thoughts as expressed in the previous article as I had significant doubts about the ability of the European currency to continue at higher prices having given a high probability to the scenario of a good correction.

However, as it turned out, I was too hasty in my stance in favor of the US currency and failed to find the right entry point.

The exchange rate, as I mentioned in a previous article, has been "heavy" lately  and after the impressive rally in the wake of political developments in the eurozone with the announcement of giant packages for defense and infrastructure, it seems to be having difficulty finding a further direction.

The developments on the Ukrainian front, although they create great prospects for optimism, as it turns out, the thorns remain with the scenarios succeeding one another.

Yesterday's Fed meeting and Chairman Jerome Powell's speech that followed did not yield any surprises, with the scenarios being quite cautious regarding the next reductions in key interest rates .

At the moment, the interest rate gap clearly favors the American currency and there is no prospect of this changing in the near future, which so far remains the main drag on the European currency's attempt to move to even higher prices.

Today's agenda is quite rich with decisions on key interest rates from the Swiss and British central banks, while on the other side of the Atlantic, the weekly unemployment claims stand out.

I remain in favor of the thoughts that the exchange rate correction may have more room, with the 1.08 level being the next challenge.

Author

Vasilis Tsaprounis

Vasilis Tsaprounis

Independent Analyst

Vassilis Tsaprounis possesses over 25 years of professional experience in Capital Markets and especially in the foreign exchange market.

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