EUR/USD: Euro in a cautious mode remains below 1.0900 ahead of two stormy days

The single European currency remains slightly below the 1,09 level with investors remaining extremely cautious ahead of major news by the end of the week.

Bets on prospects of rates cuts by Fed and ECB continue to drive the exchange rate and tomorrow's European Central Bank meeting is being watched with interest as it is likely to be the first shift in policy rate hikes in recent months.

A cut of 25 basis points is completely discounted and any other decision will be a huge surprise and could create a lot of disruption and volatility in the exchange rate.

Although the European currency is showing excellent resistance and trying to develop a mild upward momentum the prospect of easily securing the 1,10 level and staying above it remains a difficult task.

The US dollar continues to offer better rates with the gap possibly widening from tomorrow which could act as a catalyst for the US currency to move higher in medium term.

Τoday's agenda is quite interesting with the preliminary data for the labor sector and the index for the progress of the services sector in US standing out.

Without any major surprises the exchange rate is expected to remain in a limited range as investors most likely will avoid taking big bets ahead of the two stormy days with the European Central Bank meeting at noon tomorrow and US new jobs on Friday.

The pair remains extremely ''heavy''  and is struggling to break out of the narrow 1,08 - 1,09 range although it has temporarily moved slightly just outside these levels in recent days.

There are no major changes in my thinking, I prefer to remain on hold and would like a sharp dive of the pair near the recent lows of 1,06 for the prospect of buying the European currency or correspondingly some upward movement above the level of 1,10 to consider US dollar long positions.