The single European currency has returned to a reaction behavior after quite some time and the 1.0650 level is the next challenge.
From the lows of 1,0488 which noted two days earlier has reacted for more than 100 basis points and will be a major succed if it manages on the last trading day of the week to continue the upward momentum with overpast the 1,0650 level and will not close the week for the 11th time in a row with losses.
Yesterday's data did not surprise, the growth rate of the US economy was announced as expected at 2.1%, and the macroeconomic figures from the Eurozone although they did not surprise pleasantly they showed signs of stabilization something that favored the European currency.
The market behavior was quite expected as the US dollar's amazing 11-week run was only a matter of time before it got a break.
Although I expected the reaction behavior of the European currency to appear earlier but in any case the deviation of around 100 basis points is an absolutely normal range in the forex market.
The question is whether this reaction will have more continuity and was not just a short pause in the strong upward momentum of the US currency that has started after the Fed meeting last Wednesday.
And today's agenda is of significant interest with the Consumer Inflation Index in the Eurozone and the US Personal Consumption Expenditures index, a harbinger of inflationary pressures being closely watched by the Federal Reserve.
Significant deviations from estimates are likely to keep volatility high and possible low numbers in the US Personal Consumption would possible change the bets on Fed's thoughts on the long term of keeping key interest rates high.
Something that will strengthen the prospect for a further reaction of the European currency.
Although the easy down breakout of the 1,06 level temporarily disillusioned me and left me exposed with buys at the 1,06 levels, the reaction which albeit belatedly returned to the table brought the strategy back into balance.
A possible surprise in the announcements would be a reason to revise my thinking and not to risk Keeping open positions with the aim of the correction taking a larger extent.
My view that we will see prices above 1,10 again in the medium to long term remains but it may not yet be the time to hold long-term positions in favor of the euro.