Vasilis Tsaprounis
Independent Analyst
The European currency is trading in a soft environment near the 1,0350 levels in the early hours of Wednesday ahead of a very rich agenda.
The path of inflationary pressures and growth indicators in several major European economies as well as corresponding news from US are expected to give increased volatility today.
Yesterday's announcement on the course of inflation in the German economy confirmed our assessment that the pressures will show a slight decrease, something that did not favor the European currency, consequently to received slight pressures.
As we pointed out in yesterday's article, Tuesday was indeed characterized by an increased volatility with the pair moving in both directions many times but without breaking any critical levels as it remained between the 1,03-1,04 levels.
This development was quite expected in view of today's day which is characterized by stormy news which obviously limited investors to take large positions.
The market continues to show particular sensitivity to any news on inflationary pressures in Europe and the United States as it is the main macroeconomic data that Central Banks rely on to make their decisions recently.
The harmonized index of consumer prices for the eurozone due to be announced at 12:00 GMT is being awaited with particular interest by investors and any significant de-escalation is likely to create strong pressures on the European currency as will lead the European central bank to reduce its aggressive rhetoric.
For the second day in a row we would give an increased probability to the prospect that the announcement will show a restraint in the inflation that has particularly troubls the eurozone in recent months based again on the same reasoning as yesterday , that the reduced oil prices and the decompression on the high natural gas prices will play a decisive role in limiting inflathions pressures.
In any case, however, such a rich agenda is capable of pushing the exchange rate in any direction, and for this reason, maintaining a waiting attitude may be the most recommended strategy.
I will wait for new dips in the pair to take a positions in favor of the European currency, something that has not disappointed me the last months.
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
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.