By Areena FxThe Euro is edging slightly higher, hovering around the 1.0850 level, but remains within an extremely narrow trading range seen in recent days.
Investors are exercising caution and refraining from making significant moves, as the exchange rate remains stagnant and lacks clear direction.
The focus continues to revolve around potential changes in monetary policy by the two main central banks, which are key factors influencing the exchange rate dynamics at present.
Yesterday, ECB President Lagarde reiterated the ongoing discussion about decreasing inflationary pressures and the challenge of reaching the 2% target.
Currently, market sentiment leans towards the possibility of the first interest rate cuts by both central banks in June.
Recent weeks saw the US dollar gaining momentum due to President Powell’s aggressive rhetoric and rising inflation rates, briefly pushing the EUR/USD pair below 1.07. However, the subsequent days have seen a stabilization, with the Euro reclaiming some lost ground.
Despite this apparent recovery, the Euro’s strength is questionable, and the market remains in a state of anticipation, awaiting a catalyst to establish a clear direction.
Today’s focus is on US Durable Goods Orders, with any significant deviation from expectations likely to induce volatility in the exchange rate.
For now, I remain neutral, finding it challenging to predict a specific direction at these levels, but I maintain my stance to consider buying the Euro following any significant downward movement.