EUR/USD: In a very poor agenda the 1.10 will be a very hard task for today

Vasilis Tsaprounis Independent Analyst

The single European currency maintains a mild upward momentum and has already secured the level of 1,09 at the opening of the week but further rise is likely to be a difficult task for today in a very poor agenda.

The previous week was characterized by an impressive return of the European currency to the fore and with gains of almost 300 basis points it has been at the highest prices of the last quarter above the level of 1,09.

As the possibility of another hike in key US rates has been taken off the table, the US dollar has come under pressure with US Treasury yields moving away from recent highs while the geopolitical situation, although not improving, shows no signs of significant escalation.

In such an environment, the needs to buy the dollar, which has traditionally functioned as a safe haven currency, has been limited, while the speculation that had been built around the continued rise in US yields has gone out of play for the time being.

However, I do not consider that the general picture of the market has changed significantly as the latest strong momentum of the European currency could be considered a very good reaction, something that I have repeatedly mentioned in previous articles as the European currency maintains this characteristic with high fidelity.

Today's agenda is extremely poor without any major announcements and the most likely scenario is for the exchange rate to be confined to a narrow range with a further rise in the euro towards 1.10 levels would be a surprise for today.

In any case I think that around 1,10 the European currency will show signs of fatigue and my thinking has now shifted away from the Euro long positions. I am starting to think that around 1,10 might be a good position in favor of the US dollar.

I don't see any significant reason for the European currency to continue at the same pace last week's strong upward momentum as the news with lower inflation in the United States and the move away from another rates hike by the Fed will soon fade.

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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