EUR/USD: Euro remains on hold below 1.0900 as investors remain cautious

The single European currency remains trapped in a tight range near the 1,09 levels as yesterday offered no surprises on a completely indifferent agenda.

The signs of fatigue of the last rise in the euro remain on the table justifying my doubts about the easy break of the 1,10 level.

The overall market picture shows no significant differences with bets relatively flat on the prospects for a rate cut by Fed and ECB.

At the moment most odds are centered around the prospect of two more cuts by Fed although the scenarios of one and only or even three cuts are not out of the game.

While on the part of the old continent and Ecb, the bets are high that there will be two more reductions in key interest rates by the end of the year.

Even with the rationale that both central banks will proceed with the projected reductions, the gap in interest rates in favor of the American currency remains on the table, something that currently acts as the main weight in the effort of the European currency to easily move above 1,10 level.

And today's agenda is relatively poor with US Existing Home Sales being the only standout.

After yesterday's pause the US dollar appears to have a slight lead and the possibility of the European currency falling further is not bad but may without much range as investors are expected to remain cautious ahead of some more important announcements later in the week including growth rate on US economy.

Although I believe that the European currency has room for further decline I prefer to stay on hold.