|

EUR/USD: Εuro on a defensive mode, tries to stay close to 1.0900 level

The single European currency slipped below the 1.09 level in early morning trading on Tuesday in a narrow range as the euro's bullish momentum of recent days showed signs of fatigue.

The recent political developments in the United States with the assassination attempt against the Presidential candidate Donald Trump does not seem to have much impact on the exchange rate which remains attached to the prospects of a cut in key interest rates by Fed and ECB.

After the further easing of inflationary pressures in US  which surprised last week, bets on a rate cut have increased dramatically for the possibility of September while the Fed's rhetoric of a single hike until the end of the year is now under doubt.

The containment of consumer inflation has so far acted as a trigger and the exchange rate has broken free from the narrow 1.07 - 1.08 range it had been trapped in for some time, but the latest upside may still be too early to consider as  a change in trend.

As the interest rate differential remains clearly in favor of the US dollar, with the prospect of this gap widening further, I continue to have doubts about the European currency's ability to maintain long-term bullish momentum, breaking relatively easily but mostly maintaining levels above the 1.10.

On the other hand, the significant compression in which the exchange rate has been in the last period has increased the chances of execution of large stop loss orders which are likely to be above 1.10 as well as below a 1.06 which could temporarily lead the pair to a sharp peak well above 1.10 which could potentially create buying opportunities for the US currency.

Α possible such a scenario I expect for the prospect of positioning myself in favor of the US currency.

Today's agenda is quite interesting with the ZEW Institute survey of Eurozone Economic sentiment and US Retail Sales standing out.

Both have the weight to affect the exchange rate if there is any significant surprise.

I remain on hold recalling my thought as mentioned earlier on the possibility of buying the US currency on a strong peak above the 1.10 level.

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.

More from Vasilis Tsaprounis
Share:

Editor's Picks

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary. 

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.