EUR/USD: ''War drums'' shock the markets and put the Dollar under question

Once again global markets are holding their breath as developments on the Middle East front could be dramatic with significant escalation if Iran finds itself in direct confrontation with Israel.

Although the US dollar has traditionally acted as a safe haven currency, this time it is under pressure as other regional currencies such as the Japanese yen and the Swiss franc appear to be preferred by investors in this phase of risk aversion.

The new cycle of questioning of US currency started on Friday where the data on new jobs in the United States was disappointing with a significant drop in numbers while the rise in unemployment to 4.3% was also notable.

Friday's data widened the concerns about the course of the American economy and although the signs of recession have not come to the table some question marks remain.

International stock markets register significant losses with the climate of concern remaining on the table as if the escalation scenarios are confirmed the consequences could be disastrous for global trade and the global economy in general.

The latest macroeconomic data that have disappointed in the United States have affected bets on the prospect of interest rate cuts but also the yields on US government debt securities which have registered a significant decline.

The small possibility of a just one cut in key interest rates that was on the table two weeks ago is no longer there, while the possibility of two but larger size rate cuts, which could reach 100 basis points by the end of the year, increased.

And today's agenda is quite interesting with the ISM survey on the service sector in the United States standing out.

In an extremely volatile environment with significant risks on the table staying on hold might be the best idea but i will stay near to my thoughts of buying the US dollar at levels well above the 1,10 level.