EUR/USD: Τhe Euro under intense pressure, will be able to react again?

Vasilis Tsaprounis Independent Analyst

The European currency is under intense pressure in the early morning hours of Friday having retreated just above the level from 1,06 as in the fourth attempt to break the crucial level 1,0660 this time the Euro could not hold the level.

The pair appears to be breaking out of a temporary balance point between the 1,0650-1,08 levels it traded at in the last 9 days.

The main reasons that have led the US currency to gain ground remain in play as yesterday new statements from Fed official keep open the possibility that the Central Bank is willing to return to a more aggressive policy if inflation pressures remain high.

As she typically said, whether there will be an additional path to over 5% as the final target for interest rate hikes will depend on the path of inflation.

From the European Central Bank point of view nothing special has changed, the wording remain hawkish, but as i have repeatedly mentioned in the past when the European currency marked one after the other new peaks, all the causes that supported the European currency had begun to be fully assimilated into markets. And there would hardly be a new trigger that could refuel the continuation of the euro's strong upward momentum.

At the same time, pressures have appeared on the international stock markets, and if these become more strong, it is expected that bullish momemtum for the dollar will continue, as it traditionally functions as a safe haven currency.

Today's agenda is not rich and it is likely that the pair will be more sensitive to the course of the stock market indices. If the main stocks indexes will receive significant losses, the possibility for further losses for the European currency is not small.

I keep in mind the strategy of buy on dips and selling at the peaks of the pair but waiting for a more extensive decline to detect the possible position in favor to Euro.

Author

Vasilis Tsaprounis

Independent Analyst

Vassilis Tsaprounis possesses over 25 years of professional experience in Capital Markets and especially in the foreign exchange market.

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