EUR/USD: Dollar on defense between 1.1000 - 1.1100 levels as the shock to the markets
|The single European currency remains firmly above 1.10 level, having retreated from yesterday's high of 1.1145 in an environment where the range of fluctuation has increased with markets in shock from President Trump's decisions on Wednesday night to impose high tariffs on United States main trading partners.
The single European currency hit its highest levels in 7 months as bets do not seem to be confirmed and several investors are massively exiting positions in favor of the dollar that they had at much lower levels, resulting in several '' stop loss '' orders being executed during yesterday's session.
The scenario that high tariffs will fuel high inflationary pressures in the United States, although it remains on the agenda, is not yet enough to bring the American currency back to the fore and become a leading player again.
At the same time, international stock markets are under intense pressure, with yesterday's day marked by terrifying losses as bets on the possibility of a recession in the United States have increased significantly.
In such an environment where stock markets are under intense pressure with S&P barometer index having already fallen near to 5,300 points, someone would expect the US dollar to come to the fore, as it traditionally functions as a safe haven currency, but this did not happen yet.
There is apparently significant doubts about President Trump's policies, which seems to be affecting the US dollar.
However, this will not leave the economy of the Old Continent unscathed, which continues to be problematic. The trade war is expected to equally affect it, something that, together with the interest rate differential in favor of the US dollar, will continue to be the main drag in the European currency's effort to maintain its upward momentum.
On today's agenda, new jobs in US certainly stand out, which are always followed with interest by investors and if they surprise, could set new bets for the course of the exchange rate.
My thinking as expressed in yesterday's article about the desire to buy the US currency at some sharp new peak seems to be confirmed as in the last 24 hours the US dollar has absorbed some of the losses. For now I will remain bullish for the dollar.
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