The single European currency is once again under pressure, re-approaching the 1,05 level as in the wake of new geopolitical developments on the Middle East front, investors are once again turning to the US currency which traditionally functions as a safe haven currency.
Friday was characterized by an impressive reaction of the European currency which, despite the temporary pressures it received in the wake of the announcement of the new jobs in the United States, then managed with an impressive rise to approach the level of 1.06 recording gains of over 100 basis points in a very short period of time.
This development completely confirmed my thoughts as expressed in previous articles as despite the difficult environment in which the European currency had fallen I refused to position myself in favor of the American currency below 1.05 with the prospect of a good reaction gathering high chances .
This reaction happened and if we had not had the developments in the Middle East with the Palestinian attack against Israel which has sharply raised the level of uncertainty, It is very possible that this reaction would have a longer duration .
The jobs report on Friday was a positive surprise for the US economy as the numbers exceeded all expectations confirming that the labor sector remains one of the strengths of the US economy and acts as a barrier for fast de-escalation on inflationary pressures.
Without being high, some small chances remain in the game that the rate hike cycle by the Fed has not closed.
The behavior of the exchange rate on Friday afternoon had the characteristic of a trap as the impressive announcement of new jobs led several investors to immediately open positions in favor of the dollar which they were soon forced to close with a significant margin of loss.
The impressive reaction of the European currency which managed to close with weekly gains after 11 consecutive weeks of losses reminded us that one of the key characteristics of the European currency is to be able to react when under pressure, but it has had a long time to appear on the table.
The future is quite murky as new data has entered the game and the new geopolitical instability if it takes a greater dimension is capable of creating shocks in global markets that are difficult to predict.
A wait-and-see position would be a good idea But without wanting to stray too far from my basic thought of re-buying the European currency on new dips and especially on new local lows.
