EUR/USD: High volatility still in play

Vasilis Tsaprounis Independent Analyst

The single European currency is trading just above the 1,04 level having already shown signs of a correction as the pair has bounced back from the 1,0465 found it earlier in the morning as the latest German retail sales data disappointed.

The announcement of -5% was much worse than the expected -2.8% and It is typical of the significant problem that the German economy is currently facing as it is quite sensitive to the energy crisis that is affecting the eurozone due to its high dependence from natural gaz.

This news has so far been able to contain the strong upward Momentum in which the exchange rate returned after yesterday's statements by the Fed's chairman Jerome Powel , who sent the message to the markets that the Central Bank expects to limit the tension on interest rate hikes in the near future.

Bets that at the next meeting the Fed will announce an increase of 50 basis points and not 75 have already increased significantly approaching 80%.

Yesterday was a really stormy day of announcements with result the pair moved with strong volatility in both directions and after a strong fall that temporarily brought it even below 1,03 level , the Fed's president speech turned this picture upside down with result the pair moved strongly upwards.

As we aptly pointed out yesterday the initial pressures on the European currency were mainly the result of the containment of inflationary pressures, consequently the possibility that the European central bank will limit the aggressive rhetoric for its own interest rate hikes is increasing.

In general and in view of today's rich agenda but in particular in anticipation of the very important data on new jobs in the US tomorrow the pair is expected to continue the intense volatility, the possible new peaks are in play , but also some renew pressures to the European currency.

My strategy yesterday to buy the euro on the dips has once again been confirmed and i will continue to be quite focused on it as it has not let me down so far.

Author

Vasilis Tsaprounis

Independent Analyst

Vassilis Tsaprounis possesses over 25 years of professional experience in Capital Markets and especially in the foreign exchange market.

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