EUR/USD: The pair digests levels below 1.2000 as further rise becomes a challenge

The single European currency is trading in a milder tone compared to the start of the week as, after the good correction of the previous days, a mild upward momentum has returned to the table.

The exchange rate remains sensitive to news on the interest rates outlook from  Fed and the European Central Bank.

Bets on further reductions in key interest rates by  Fed have shrunk significantly, with one more reduction currently remaining the base scenario for the coming months, which is however quite far from previous bets, some of which even spoke of three reductions in key interest rates.

The enigmatic personality of President Donald Trump and his controversial policies remain a major risk for the markets and the US currency and are certainly one of the reasons why the US dollar has currently lost its former luster.

However, as long as stock prices on the US stock exchanges remain in a favorable environment and several macroeconomic indicators of the US economy continue to not create significant reasons for concern, the US dollar is far from collapse.

At the same time, the European economy remains in a fragile recovery environment and further very high prices of the European currency is quite certain that will create increased concern for exports.

The correction of the exchange rate so far and the return of the pair  below the 1.2000 level has  confirmed my  idea of ​​buying the US currency at the 1.2000 level, as noted in the previous article.

For now, I will maintain the same thought, maintaining the assessment that prices of the European currency well above the 1.2000 level are a cause for concern and the European economy cannot easily justify such prices for a long time.