EUR/USD: Euro remains firm above 1.1100 as no big bets ahead of Fed

The single European currency remains firmly above the 1,11 level in an extremely tight trading range as investors remain cautious ahead of tomorrow's stormy day when the Fed will announce the size of its rate cut.

It's one of the few times in recent Fed meetings that the bets have been relatively equal,  but have changed significantly in a short period of time as the possibility of a 50 basis point cut in key interest rates from the 20 to 30% level where it was a week ago has already climbed to 60 % a day before the decision.

Although concern arising from the recent contraction of the US labor sector remains, the recent data from US did not surprise negatively and in my view cannot justify a significant change in bets and although the probability has climbed well above 50% I remain in my assessment that ultimately the decision from the Fed will be a reduction of 25 basis points.

Today Retail Sales in US are announced, a critical macroeconomic data as it is well known that consumption is the main pillar of the American economy and it could give some clearer conclusions and estimates for tomorrow's Fed decision.

Today's agenda are completed by the research of the ZEW  institute on the economic current situation and sentiment in  German economy as well as in the Eurozone.

With no major surprises the exchange rate is expected to remain in a narrow trading range either side of the 1,11 level as investors are most likely will avoid taking big bets ahead of tomorrow's crucial Fed meeting.

I remain on hold but keeping in my mind to buy the US currency near the 1,12 level or maybe a little higher especially in the scenario of a sharp peak in a speculative climate before the Fed with the final decision being a reduction of 25 basis points.