Vasilis Tsaprounis
Independent Analyst
The European single currency is holding just above the 1,0950 level at the start of the new week trying to avoid further losses as in the wake of the US jobs announcement on Friday the US currency found support from the positive news and broke violently the critical level of 1,10.
I remind that one of the main reasons that the European currency relied on to develop an upward momentum in the previous two months was the doubts about the labor sector in the United States which showed significant signs of contraction, with the markets temporarily positioned against the US dollar as they discounted more aggressive policy from the Fed in the path of rates cuts.
Friday's data came to restore optimism for the development path of the American economy as it is known that the labor sector is one of the main pillars which, together with consumption, is US economy engine.
At the same time the European currency had shown significant signs of fatigue and for this reason I had significant doubts about its ability to easily break through and stay above the 1.12 levels, which the market development confirmed.
Expectations for another one 50 basis point cut from the Fed have been reduced more after Friday's data, with the scenario of 25 basis points gaining ground.
Today's agenda is of little interest in terms of macroeconomic data as the only standout is Retail Sales in the eurozone but is extremely rich in statements as several FOMC members will have various comments from midday onwards on the other side of the Atlantic.
As I failed to position myself in favor of the US dollar despite strongly believing that the European currency would soon come under question, I prefer to remain on hold closely watching possible levels where the exchange rate could react.
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