The single European currency appears to have entered in a new round of uncertainty after the strong US jobs report on Friday.

The euro is already falling below the 1.07 level, retreating almost 100 basis points from highs of 1.0780 where it was on Friday before the data release.

The US labor market continues to be one of the strong components of the US economy and Friday's pleasant surprise keeps the bets high and the possibility that the rate hike cycle is not over.

Currently bets on another 25 basis point rate hike are hovering around 30%.

At the same time, the aggressive rhetoric of the European Central Bank has not decreased, but the inflation data from the Eurozone, which is coming to light and showed signs of deflation of inflationary pressures, certainly does not support the ECB's narrative.

As I have mentioned repeatedly in previous articles the path of the exchange rate continues to be extremely sensitive to the path and prospects of rate hikes by the two main central banks.

Economic data announcements and statements of officials from the two central banks continue to influence the exchange rate day by day.

After a very strong reaction of the European currency almost 150 basis points from the lows of 1.0635 now the path of the exchange rate shows again a mild positive momentum for the US currency which is capable of taking it back to the recent local lows.

Today's agenda is quite interesting with the announcement on the path of producer inflation in the Eurozone and the report on the services sector in the US standing out.

My basic thoughts on the course of the exchange rate has no any changes, as in previous articles mentioned, I will remind that the losses suffered by the European currency most likely will be limited, I see no signs of collapse and the reactions will come back to the fore every time the pair marks local lows.

So I will maintain the strategy of buying the European currency at the new dips which once again last week did not disappoint me.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD holds steady near 1.0850 ahead of Eurozone PMIs

EUR/USD holds steady near 1.0850 ahead of Eurozone PMIs

EUR/USD oscillates near 1.0850 in the early European session on Wednesday, flirting with two-week lows. The pair turns cautious ahead of preliminary Eurozone PMI data while the US Dollar faces fresh selling amid the USD/JPY slide. US PMIs eyed as well. 

EUR/USD News

GBP/USD remains pressured below 1.2900, UK/ US PMIs eyed

GBP/USD remains pressured below 1.2900, UK/ US PMIs eyed

GBP/USD remains under pressure below 1.2900 early Wednesday. Broad risk-aversion offsets the USD/JPY decline-driven US Dollar weakness, rendering negative for the pair. The focus now shifts to the UK and US S&P Global PMI readings. 

GBP/USD News

Gold stays hopeful above $2,400, as US PMI data loom

Gold stays hopeful above $2,400, as US PMI data loom

Gold price is looking to build on the previous rebound above $2,400 in Asian trading on Wednesday, despite a buoyant tone seen around the US Dollar and the US Treasury bond yields. Gold traders now look forward to the global preliminary business PMI data for fresh trading impetus.  

Gold News

PEPE price poised for a rally after retesting trendline support

PEPE price poised for a rally after retesting trendline support

PEPE price broke out of a descending channel pattern, surging by 12%, but is experiencing a corrective pullback, trading 2.3% lower at $0.0000121 as of Wednesday. 

Read more

Bank of Canada: Rate cut expected; forward guidance eyed

Bank of Canada: Rate cut expected; forward guidance eyed

The Bank of Canada will take centre stage at 13:45 GMT. Alongside the rate decision, the central bank will deliver the rate statement and the Monetary Policy Report, released quarterly and providing investors with a glimpse of what the central bank expects in Q3.

Read more

Majors

Cryptocurrencies

Signatures