EUR/USD: Is the euro back?

The common European currency continues its upward reaction and has touch already the levels of 0.9850.

Having gained more than 300 basis points from the lows a 3 days ago , the reaction is quite intense and gives hope to those holding positions in favor of the European currency.

Yesterday's announcement on the path of inflation in Germany strengthens the prospects for more aggressive policy from the Ecb's point of view on future interest rate hikes.

Nevertheless, today's announcement on the inflation pressures in the entire eurozone is expected to have more weight and to give clearer conclusions about these prospects.

The key question about the interest rate gap between Fed and Ecb continues to drive the market and any signs of a narrowing of this gap significantly strengthens the European currency.

As we have repeatedly mentioned even though the pair remains in a bearish channel the reactions are still in play and every time where the pair makes new lows the reaction follows extremely faithfully.

As yesterday, today the market is characterized by a rich calendar of macroeconomic news with the Eurozone inflathion price index and the level of unemployment expected with great interest by investors.

And then several announcements from the US side . Indicators of business and manufacturing activity as well as the course of personal consumption and income in the US economy come to fill a very rich calendar.

Although my long-term view has not changed and i remain optimistic that the exchange rate will return to higher levels, a return to levels near to 1/1 in just three days seems quite a difficult task for the European currency.

A scenario with high volatility and signs of fatigue for the latest uptrend of the euro is quite likely for the rest of the day.