The single European currency remains in a tight range for a third day in a row after being under pressure last Wednesday in the wake of the Fed‘s interest rate decision.
Although the Fed’s message of keeping key interest rates high for a long period of time has put considerable pressure on the European currency it has shown signs of stabilization in recent days and its possible that reaction behavior will come back into play soon.
Beyond the play around the key interest rates of the two central banks, the European currency continues to be under discussion and due to the macroeconomic fundamentals of the eurozone which continue to create concern and the possibility of a recession remains on the table.
While at the same time the pressures that the international stock markets have recently received certainly favor the US currency which traditionally functions as a safe haven currency.
However, I continue to believe that there are no major reasons for the collapse of the European currency, and apart from the fact that it is currently in the lower range of a larger radius between the levels of 1,05 -1,14, which I believe will be the trading range till the end of the year and I have already noted in a previous article, I do not see anything important to change in the overall picture of the course of the exchange rate.
Today’s agenda is rather poor and the only one that stands out is the announcement of the IFO institute on business climate and prospects of the German economy.
A significant deviation from estimates could be reason for the exchange rate to break out of the narrow range of fluctuation below the 1.07 level that it has been in for the past few days.
I will remain in my opinion in favor of the European currency with a good possibility of strong reaction at these levels and for this reason I still maintain long positions in favor of the euro.
