The single European currency was a breather ahead of 1,08 in early morning trading on Thursday as mild bullish momentum remains in play but does not look capable of easily returning to strong bullish mode.
Yesterday did not bring any major surprises as the comments from Fed officials were broadly expected and did not show a significant diversify from Jerome Powell’s latest statements over the weekend.
Βets on a possible rate cut by Fed in May or June remain quite high and as long as there are no significant changes in the macroeconomic landscape it is probably the most likely scenario.
The single European currency is also supported by the good climate that prevails in the international stock markets as the S&P barometer index is a breath away from the levels of 5000 setting unbroken records which limits the feeling of risk in the markets.
Therefore, the needs to buy dollars, which traditionally functions as a safe haven currency, is limited. I believe that there is an over-optimism in the international stock markets and the risk of a good correction is lurking which could re-fuel a fresh bullish cycle for the US currency.
On the economic agenda side, in addition to some statements from Ecb officials, we have the weekly jobless claims in US which are always watched with interest by the market as the labor sector remains one of the main pillars and one of the main reasons that the American economy shows remarkable resilience.
Likely for today the European currency will struggle to easily secure the 1,08 level and easily remain well above it with the scenario of the exchange rate stuck in a limited range of fluctuation between the 1,07 – 1,08 levels remain on the table.
