Vasilis Tsaprounis
Independent Analyst
The European single currency has lost ground near the 1.0650 level as the US dollar has returned to the fore and is recording gains against all major currencies.
Pressures on international stock markets have returned to the table and as a result the US currency receiving the benefits as it traditionally functions as a safe haven currency.
Yesterday's trading day was quite choppy as initially the good news from Eurozone created a euphoric environment and the European currency tried to move well above the 1,0700 level but the continuation was quite different as the rise in US bond yields and pressures on international stock prices shifted the field in favor of US currency.
Market's general picture remains the same with the European currency apart from some very good reactions struggling to develop a strong bullish trend and approach the 1,10 levels again.
The interest rate differential in favor of the US dollar which may widen in June if the European Central Bank decides on the first cut in key rates continues to favor the US currency and the possibility of the 1,06 level being tested again remains on the table.
Bets are currently concentrated on three rate cuts by European Central Bank, while from Fed's side the landscape is murkier with the prospect of the first rate cut to the end of the year with several chances on the table for September .
Today's agenda is extremely rich only on the other side of the Atlantic as in the euro zone several markets are closed due to Labor Day and there is no major announcement.
Fed's meeting stands out but mostly President Powell's comments as any change in monetary policy is without any chance for today.
A possible hawkish rhetoric from Jerome Powell could give more room for dollar gains and the 1,06 level to be under challenge again.
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