EUR/USD: Euro remains steady near 1.1550 as geopolitical risks fail to boost the Dollar

The single European currency is trading near the 1.1550 level in the early hours of Tuesday in a narrow trading range as developments in the Persian Gulf have raised the concerns  to high levels.

The US dollar, which has traditionally functioned as a safe haven currency, has not reacted so far to these developments, which confirms that the enigmatic policies of President Donald Trump and his controversial personality have led the US dollar into question.

The new geopolitical front that has opened in the Middle East is being added to that of Ukraine, creating an explosive cocktail which, if further escalated, risks blowing up the course of the global economy as high oil prices are most likely to bring the specter of inflation back to the fore.

The current downward trend in key interest rates by the two main central banks could be redefined, which would dramatically change the chessboard in the game.

The clearly better interest rates currently offered by the US dollar have not managed to halt the down course of the US currency in recent months, as the trade war started by President Donald Trump, although it is in recession, has brought the issue high on the agenda.

Despite recent temporary deviation slightly above the 1.16 level, in general the exchange rate remains in the familiar environment of recent weeks between the 1.10 - 1.16 levels with the chances now increasing regarding the European currency's breakout towards higher levels.

Investors' interest, beyond geopolitical developments, is expected to be focused on the Fed meeting, which begins today and culminates tomorrow, where the level of key interest rates will be announced, with no major surprises expected, but mainly on the speech by President Powell , who is likely to give some new messages about  Fed's next thoughts.

No changes on my thoughts. The signs of fatigue on Euro rally above the 1.15 level, as I noted in last week's article, have indeed come to the table, albeit with a bit of a delay, supported by developments in the Persian Gulf.

I remain on hold, expecting possible levels near 1.17 to 1.18 for the possibility of buying the US dollar as I estimate that there will be conditions for market consolidation and the pair it will not be easy to climb to 1.20 without first digesting some levels.