By Areena FxEuropean single currency eases slightly from 1,1050 levels in a calm market in the wake of the Christmas holiday with no major news.
The European currency managed for now to secure the level of 1,10 which is currently working as a support as the latest rhetoric from the Fed on the possibility of proceeding with a rate cut relatively earlier than previous estimates remains on the table.
However, I still have significant doubts about whether this rhetoric is capable of fueling the European currency’s upward momentum for much longer.
Let’s not forget that the European economy continues to be problematic and although lately there are some signs of improvement, especially after the significant drop in energy prices, the ghost of recession, although it has gone little more far away, remains.
Today’s agenda remains poor as there is no major announcement from macroeconomic news nor official statements from the two main Central Banks.
The positive climate that seems to prevail in the international stock markets in turn burdens the US dollar as it has limited the needs to buy dollars which traditionally functions as a safe haven currency.
Τhe rally in international stock markets over the past 2 months has surprised many analysts and a possible correction is likely to put the European currency’s recent rise in doubt once again.
I would give a good chance to such a scenario as the S&P barometer index is nearing all-time highs and possibly beyond a technical peak would not easily justify the same picture for the next 2 months.
In general, I have not moved away from the idea of buying the US currency as I believe that the European currency is hard to continue the same upward pace and corrections will come back to the table.
I would expect levels close to 1.11 for sell the Euro unless there are some catalysts that will dramatically change the overall picture of the market.