EUR/USD: Εuro struggles to move higher as risk on new correction appears elevated

The single European currency is holding near the 1,750 level in the early hours of Tuesday, trying to maintain a mild upward momentum and move further away from the lows of the previous week where  challenged  1.16 level.

Except for the exchange rate peaking above the 1.19 level two  weeks earlier in the wake of the Fed's decision to cut interest rates, the overall market picture remains the same with the range of variation being relatively limited and big bets not on the table at the moment.

Investors continue to carefully monitor geopolitical developments, the two main central banks and of course President Trump, who could bring a surprise to the table at any time and remind us of his controversial personality.

Once again, the US central government is close to shutting down as it expects a new increase in the balance sheet, and under other circumstances, as history has shown, the concern would not be significant as Congress always makes the appropriate decisions.

But sometimes the surprise comes when no one expects it which is capable of creating a temporary shock to the markets.

On the issue of interest rates, which will largely determine the course of the exchange rate in the foreseeable future, there are no surprises, with bets currently in favor of two more interest rate cuts by the Fed before the year end.

Today's agenda is quite interesting, with the inflation rate in Germany and President Lagarde speech standing out.

Although the US dollar continues to be under significant challenge, on the other hand, I continue to have doubts about the ability of the European economy at this time to support an exchange rate in favor of the euro well above the 1.20 level.

For this reason, I would prefer for now to maintain the strategy of buying  the US currency at some new peak as I estimate that corrections will remain on the table for some time.