EUR/USD: Euro on correction mode a breath away from 1.0700 level

The single European currency maintains for the second day in a row a mild uptrend, having moved well away from the 1,06 level, having hit little earlier highs at 1.0690,  one breath away from securing the 1,07 level again.

Yesterday did not give any surprise, President Lagarde did not change her rhetoric and the reaction of the European currency was generally expected as the dust from the hot inflation in the United States and  the geopolitical risk of further escalation on the front of the Middle East is temporarily out of the game, but remains on the table.

Israel's war council is now determined to respond to Iran's strike, but Western diplomacy continues to exert pressure to avoid further escalation. A scenario in which there will be some response but it will be controlled without causing significant pain to the opposing side in the hope that it will go unanswered has a good chance.

In any case, the developments on the Middle East front continue to gather the interest of investors with the international stock prices having found equilibrium points for the time being,  avoiding further losses.

But the temporary pause and temporary calm has not taken the risks out of the table as developments could be dramatic and a new round of risk aversion could come back into play which could act as the new trigger for further losses on European currency.

Although I remind that I was clearly in favor of the reaction of the European currency, I expected it to occur at lower levels and I have several doubts about whether this upward movement of the European currency will be able to last long.

Today's agenda is relatively poor and apart from weekly US jobless claims and some statements from Fed's officials there is no big news on the table.

The latest reaction of the European currency partially justified the thoughts as they were captured in previous articles as from one side the reaction appeared in the game but having feared the strong momentum of the US dollar and also the latest geopolitical developments I moved the entry point from the 1,06 level to 1,05.

However, the scenario of the 1,06 level coming under challenge again remains in play as the US currency continues to reap the benefits of higher interest rates with the prospect of the gap widening in June.

For now I remain in a wait position keeping the thought of buying the European currency at the levels near 1,05 while on the other hand as I have doubts about whether the reaction of the last 2 days will have much continuation I will consider the possibility of buying the US currency at slightly higher prices near the 1,0750 level.