EURUSD On recovery mode ahead of ECB
The single European currency once again reacted strongly after yesterday’s pressures and has once again recovered above the level of 1.06.
Yesterday was a shocking day as the European currency found itself losing more than 200 basis points in an environment where all the stock markets suffered significant losses as developments on the fate of the Swiss bank Credit Suisse created panic in the markets.
Finally the management of the Swiss Bank was forced to request the support of the central bank in order to ensure the necessary liquidity in order to cover the significant leakages from clients deposits.
This fact has restored calm in stock markets, something that helped the European currency to recover.
As recently as yesterday’s article I had mentioned my thinking on buying the European currency after sharp dips as its ability to react has been shown in recent months with great fidelity.
The overall picture of the market has not changed the pair remains sensitive to announcements and market developments with the issue of key interest rates remaining in the foreground.
Later in the day the announcement from the European central bank is expected to raise interest rates by 50 basis points and any other decision will be a huge surprise , It will shock the markets and could lead the European currency to further heavy losses.
As the decision is almost completely discounted and the surprise gathers very little chance the interest is concentrated mainly on the statements of President Lagarde , especially in an environment that the banking sector in the United States and the European Union is called into question.
My general thinking on the course of the pair has not changed and I will repeat the related idea of buying the US currency on peaks with corresponding buying of the euro on sharp dips , as happened during the day yesterday.
Even if the European currency is favored by President Lagarde’s statements and a temporary upward movement is created, I think it is unlikely that this will last long, especially while waiting for the corresponding movement from the Fed.
It is characteristic that despite the temporary break of the 1,07 level the exchange rate remains trapped between the 1,05-1,07 levels for the last 4 weeks. Thus attesting to the fact that the pair remains under confusion and the search for a specific direction is something difficult.
