By Areena FxThe euro is currently trading below the 1.0850 level, facing slight pressure as the positive reaction observed on Friday wasn’t sustained, placing the euro under renewed pressure. The crucial level of 1.0800 remains both a challenge and a robust support.
Recent developments in the Middle East, particularly the deadly attack on the American base on the Jordan-Syria border, carry the risk of escalating tensions to a dangerous extent. If such escalation occurs, it is anticipated to provide a significant boost to the US dollar, known as a traditional safe-haven currency.
The market has absorbed the dust from last week’s economic events, including the surprising growth path of the US economy. Now, attention turns to the upcoming week with the Federal Reserve’s meeting on Wednesday and new job data on Friday, capable of breaking the exchange rate out of its recent tight range between 1.08 and 1.09.
Friday’s exchange rate behavior reinforced the notion that the US currency may have the upper hand for now, but the euro still exhibits resilience in its reactions.
Today’s economic agenda is relatively quiet, but the rest of the week is expected to be dynamic, with major macroeconomic news likely increasing volatility and challenging critical levels.
The overall scenario currently leans slightly in favor of the US dollar. If this week’s macroeconomic announcements favor the US currency, the critical level of 1.0800, recently under challenge, is likely to be breached.
In any case, I maintain a cautious stance, considering that the euro’s strong reactions have sidelined some investors who delayed taking positions in favor of the US currency.