The single European currency remains under pressure for a sixth straight day as last week’s Fed meeting acts as a catalyst for now and favors the US currency against all major currencies.
The US Federal Reserve’s rhetoric that it will keep key interest rates high for an extended period of time has driven US bond yields high, creating a climate of euphoria in favor of US currency.
An explosive cocktail has been created at the moment which acts as a weight for the European currency as the climate of uncertainty in the international stock markets, the Fed’s rhetoric of high prices for interest rates for a long period of time and the different pace in the two main economies which are currently leaning clearly in favor of the US economy has led the European currency to be strongly contested and for 11 consecutive weeks it is moving downwards.
Although the rhetoric of the European Central Bank which had driven the euro during the summer to levels well above 1,12 has not left the table but it seems for the moment to have faded and has not managed to contain the downward course of the Euro.
I remind that during the times when the European currency had developed this strong Momentum, I was one of those who had a strong opinion regarding the evolution of the course of the exchange rate as I considered that this rhetoric was not capable of supporting the Euro’s upward momentum for a long time and soon this would be challenged again.
The US economy was showing signs of better coping with high interest rates was already on the table, the development proved that the different pace of the two economies is For now One of the main reasons for the strengthening of the US currency.
Τhe European currency has accustomed us to a behavior of reactions which for now have not appeared in the last five days and apart from the intense volatility last Wednesday where the European currency approached 1,0750 there is nothing else on the table.
The accumulation of enough data in favor of the US currency creates the trap that some variation in this data is capable of overturning the dollar’s positive sentiment.
Today’s agenda is limited to new home sales and Consumer confidence in US.
Although the data is currently against the euro I will stick to the basic strategy waiting for a good correction and for this reason positions in favor of the European currency at levels above 1.06 remain on the table.
