EUR/USD: Euro on rebound mode above 1.1050 after a three-days losing streak

Τhe single European currency is trading just above the 1,1050 level in the early trading hours of the new week as it tries to pare the losses of the previous three days.

From the time the European currency touched  1,12 level, the highest levels of the past few months, signs of fatigue were strongly on the table, further rise was questioned and the US currency returned to the fore.

This development fully vindicated my thoughts as they were expressed in previous articles as I had significant doubts about the ability of the European currency to continue the strong upward movement while a very good idea was also the positioning in favor of the American currency at the level of 1,12.

I remind  of course that on Friday as the last day of the week but also with an extremely rich agenda with critical macroeconomic announcements, I preferred to lock the gains over the US currency and remain in a waiting position.

Fed and ECB interest rates cut prospects remain the main catalyst affecting the course of the exchange rate.

At the moment, most bets are on the possibility of a 25 basis point cut in key interest rates by Fed in September, which would narrow the interest rate gap in favor of the US currency but not eliminate it.

The positive data on the path of development of US economy announced last Thursday came to balance the reflection from the recent disappointing data on the labor sector in the United States.

At the end of the week we have fresh data on the US labor sector with new Non-Farm Payrolls to be announced as well as the unemployment rate which could again create strong volatility in the markets with provide more room for gains on the US dollar or challenge the recent rebound.

Today's agenda is relatively poor which could support a limited volatility scenario with no big bets on the table.

After positioning in favor of the US currency at the levels of 1,12 and lock the profits on Friday I prefer to stay on hold.