The single European currency is trading slightly above the 1.09 level after yesterday’s strong rise in the wake of comments by Fed‘s President Jerome Powell, who brought a different tone to the table about the central bank‘s future intentions.
Chairman Powell’s message was clear about the idea that the Fed is not willing to keep interest rates high for an extended period of time.
The market enthusiastically accepted these statements, with U.S. equity markets rallying and the general climate of risk appetite strongly favoring the European currency.
As I emphasized in yesterday’s article, the recent significant de-escalation in energy prices, with oil and natural gas prices falling sharply on the international financial markets, seems to have had a significant impact on officials’ thinking, and the possibility of an earlier de-escalation in key interest rates seems to be increasing.
The bets seem to favor the European currency for now, but today’s meeting of the European Central Bank and especially the comments of President Lagarde will clarify the picture.
The idea that ”everything is about interest rates” continues to be the main picture affecting the exchange rate.
Once again, in yesterday’s article, I mentioned the idea of preferring to buy the European currency on a dip, but developments have caught up with me and unfortunately, the opportunity to buy the European currency near the levels of 1.07 and below seems to have been temporarily lost.
In view of the critical statements of President Lagarde, a wait-and-see attitude is the best thought, with the possibility that the ECB president will repeat the soft tone of the Fed is increased.
