EUR/USD: Euro jumps to the threshold of 1.1000 level against the bets

The single European currency has jumped nearly 200 basis points in less than 24 hours as President Donald Trump's announcements of high tariffs and retaliatory statements from the European Union signale the start of a trade war, with investors holding their breath in a foggy environment.

The ''tariffs dance''  that President Trump has been setting up for some time is holding up well and remains high on the agenda, with the coming future expected to be exciting with intense volatility in the markets.

In such an environment where stock markets are under intense pressure with S&P barometer index having already fallen below 5,500 points, someone would expect the US dollar to come to the fore, as it traditionally functions as a safe haven currency, but this did not happen.

There is apparently significant doubts about President Trump's policies, which seems to be affecting the US dollar as the chances of a recession in the US economy begin to increase.

However, this will not leave the economy of the Old Continent unscathed, which continues to be a problematic. The trade war is expected to equally affect it, something that, together with the interest rate differential in favor of the US dollar, will continue to be the main drag in the European currency's effort to maintain its upward momentum.

If we exclude the frequent shocks that President Trump gives to the markets, the general picture of the market remains the same and the temporary surge of the European currency will need to continue for a long time to consider that recent levels have changed significantly.

The Ukrainian front continues to retain the interest of investors, but as I have mentioned in previous articles, unfortunately there are still many thorns on the road to an irreversible ceasefire.

The dust from yesterday's developments and President Trump's decisions remains in the game, but investors are likely to maintain a more conservative approach and the exchange rate may will soon balance, especially in view of the very critical announcements on new jobs in the United States tomorrow.

If the critical level of one 1,10 collapses relatively easily and the exchange rate remains above it, levels near last year's highs near 1.12 could be a challenge, but is  something that I would give little chance.

As the environment remains foggy, I maintain a wait-and-see stance but I am considering a repositioning in favor of the US dollar, possibly to a new peak  well above 1.10.