EUR/USD: Looking for direction while remaining below 1,1600 with no big bets on the table

The single European currency is trading just below the 1.16 level in a narrow trading range as investors remain on the sidelines after a strong rally on Friday in the wake of new jobs in the United States.

The issue of the Fed's key interest rates remains very high on the agenda, as bets on the September decision are relatively evenly split, which is expected to increase the level of speculation as we approach the day of the meeting.

Friday's disappointing US jobs data reversed the mild rally in the US currency that had been on the table recently and has rekindled a consolidation mode that could remain on the table for a few days.

The issue of trade tariffs remains in the spotlight and depending on the appetites of the enigmatic President Donald Trump, the impact on markets could be small or even huge.

The yields on US government debt securities, although they have declined compared to the previous week, remain at attractive levels with the 10-year bond moving slightly above the level of 4.2, which currently supports the US currency as key interest rates remain clearly in favor of the dollar.

If we exclude the negative surprise of Friday with the decline in new jobs in the United States, there are no other significant surprises in the macroeconomic data, with the growth of the Eurozone moving at positive levels, but concerns remain, while on the other side of the Atlantic, the American economy appears to have a clear lead in growth rates, at list for the moment. 

For the future, the environment remains cloudy, investors do not seem willing to take big bets after the recent sharp corrections and a consolidation mode would be a likely scenario.

I remain in a wait-and-see position but I maintain the thought of the possibility of buying the US dollar at a new strong peak.