(Vasilis Tsaprounis – TopFX)
European currency maintains mild upward momentum despite economic uncertainties
Economic News Affecting US Dollar
The European currency has successfully secured the level of 1.10 and is currently maintaining a mild upward momentum in an attempt to move higher. However, recent economic news has not favored the US dollar, particularly the significant decrease in the producer price index, which has reduced the likelihood of the Federal Reserve increasing key interest rates at its next meeting.
Inflationary Pressures and ECB Rhetoric
On the other hand, inflationary pressures in the European economy remain high, prompting aggressive rhetoric from the European Central Bank. The gap in interest rates that had caused a dramatic fall in the European currency a few months earlier has now been bridged by a large percentage.
European Currency’s Performance
Despite the significant losses that had brought the pair to the lows of 0.95 in September 2022, it is still premature to claim that the European currency is at high levels. However, it has absorbed a significant portion of these losses.
US Economic News
Today’s economic agenda is light on European economic news but rich on the US economy side, with the announcement of retail sales and the Consumer Sentiment survey. This fundamental economic news with relatively increased weight could give direction to the exchange rate, and if there is a reversal of negative sentiment from the latest economic announcements, it could create a good correction in favor of the US currency.
Conversely, if there is renewed disappointment with bad economic fundamental news, it is likely that the pair will test new highs by breaking upwards and 1.11. As previously mentioned in a previous article, the strategy for trading in the foreign exchange market is determined day by day, and the correlation of the course of the exchange rate is completely determined by various economic announcements, trying to detect the Federal Reserve’s intentions.