EUR/USD: Euro on rebound mode near 1.0850 with 1.0800 level remaining a challenge

The single European currency is trading near the 1.0850 level in the early hours of Monday in an attempt to limit the losses of the previous three days where after peaking at the recent highs of several months at the level of 1.0955 there was a satisfactory correction towards the level of 1.08 which, however, proves to be a good support for the time being.

The overall market behavior of the last few days has not shown any significant difference, confirming to a significant extent my thoughts as they were mentioned in recent articles, having given a high probability that the exchange rate will remain ''heavy'' and find it difficult to find any fresh direction, with a consolidation mode being the most likely scenario.  

President Trump's ''tariffs dance'', geopolitical developments on the Ukraine front, and political decisions on the giant defense and infrastructure packages in the eurozone remain at the top of investors' agenda and will largely determine the course of the exchange rate in the near future.

Despite the optimism for a quick end to the tragedy on the Ukrainian front, it turns out that there are still many thorns left until an irreversible ceasefire.

The European economy continues to be a concern and it is not certain when the positive effects of the defense and infrastructure support packages from the eurozone states will be seen in the real economy.

Although the intense concerns about the significant impact of tariffs on US inflation have subsided, the landscape remains cloudy and the prospects for the interest rate gap between Fed and Ecb to remain in favor of dollar is the most possible scenario.

This seems to be currently acting as the main catalyst and the most strong weight on European currency attempt to break up on prices much higher than 1,10 level.

Today's agenda is quite interesting, with important data on the manufacturing and services sectors in the eurozone and the United States standing out.

The return of the exchange rate to 1.08 level partially confirmed my thoughts to maintain the position in favor of the US currency and although it was opened in a hurry and at the wrong point, I managed to return close to the opening levels and exit without big losses, as I had emphasized in recent articles.

For the near future, I would prefer to maintain a wait-and-see attitude, although I maintain the assessment that the exchange rate correction will likely have more room and the 1,08 level will break downwards soon.