Vasilis Tsaprounis
Independent Analyst
EU Economic data continue to give disappointment and the course of the European economy is in question again.
Recent data from Germany have sustained this environment as the private sector has grown less than expected, bringing fears of a recession in the European economy to the fore.
As we mentioned in Tuesday's article the pair remained in a narrow range of variability avoiding to take a specific direction.
The yield on the US 10-year bond fell slightly, which helped and push the euro to the level of 1.06 yesterday, but it had a limited duration.
Although the stock markets are showing signs of stabilization so far, there are some satisfactory corrections, but without eliminating the risk of further significant falls.
Despite the persistent message from Fed that there is a "need to raise interest rates 'much more' in the coming months," the US dollar did not show an immediate reaction.
However it is not something that can be ignored and already today the US dollar is gaining ground and the only question remains whether the exchange rate is already at low levels which limits traders to take new big short positions.
After the confirmation of the last view for maintaining neutral positions with the exchange rate moving in both directions we are see now the chances of the exchange rate sleeping further low rising.
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