EUR/USD: New YTD lows for Euro as dust from hot US inflation hasn't settled

The single European currency remains under doubt and already the 1,07 level has collapsed as the dust from the hot inflation announced in the United States two days earlier has not settled with the US dollar strengthening against all major currencies.

Yesterday's meeting of the European Central bank did not bring any surprises to the table with President Christine Lagarde being quite conservative in her statements avoiding the critical questions about the prospect of interest rate cuts by the ECB at some next meetings.

Her classic statement that every decision is month-by-month and data-driven did not change, but bets on a possible June rates cut remain high.

The US dollar maintains the advantage in relation to the level of the key interest rates and if the scenario is confirmed that the European Central Bank proceeds with a reduction in interest rates in June but without the Fed doing the same, the gap in interest rates will widen, a perspective that currently supports US currency.

The international stock markets surprised once again and in an impressive reaction pared down a significant part of the latest losses but something that I find it difficult to fully justify,  as high inflation, key interest rates remaining at high levels and geopolitical concerns that remains high on the agenda create a dangerous cocktail on the global economy and stocks performance.

I would give a little more probability to a scenario where the correction in international stocks would have a greater extent.

After the flurry of news in the last 2 days today's agenda is poorer. The only one that stands out is the University of Michigan's index of consumer sentiment which is always watched with interest by investors as consumption remains the main driver of the US economy.

Although USD momentum remains on the table I will remain loyal to my view to buy the EUR near the 1,06 levels as I believe soon there will be signs of fatigue on  Dollar's bullish trend and  EUR's reactionary behavior will come back into play.