EUR/USD: US yields bring the Dollar back to the fore
|The single European currency is trying to defend the level of 1,05 after the fresh pressure it received during yesterday in the wake of the announcement on Consumer Inflation in the United States.
Inflationary pressures, although they have eased significantly, remain at uncomfortable levels for the US Federal Reserve and yesterday's slightly higher-than-estimated announcement on consumers inflation sent US Treasury yields higher, leading the US currency to gain.
Μarket behavior over the course of yesterday broadly confirmed my thinking as captured in yesterday's article as I expressed considerable doubt as to whether the latest European currency reaction would have the potential to be of greater scope and duration.
Today's agenda includes industrial production in the eurozone, the speech of President Lagarde and then the announcement of Consumer sentiment in the United States.
Τhe general climate continues to favor the US currency As the better pace of the US economy compared to the European, high yields offered by the debt securities of the American government but also the climate of uncertainty which traditionally strengthens the American currency which acts as a safe haven currency are all still in the table .
On the other hand, the levels of 1,05 are certainly quite low prices for the history that the European currency has shown and for this reason in the basic strategy and thinking there is difficulty in positioning myself in favor of the American currency at these levels.
So I will continue to prefer positioning in favor of the European currency especially after sharp dives and new local lows.
Without significant surprises in the announcements it would be difficult to see during the closing of the week some extreme behaviors and the most likely scenario is the exchange rate to remain close to the levels of 1,05 - 1,06 without breaking the last lows of 1,0450.
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