EUR/USD: Euro remains in consolidation mode near to 1.0950 level in a poor agenda

The single European currency remains in a narrow trading range for a second day in a row as Monday's market shock has subsided but with investors remaining extremely cautious.

Yesterday did not provide any major surprises with the European currency successfully defending the level of 1.09 having for now managed with a mild reaction to move slightly upwards approaching the level of 1.0950.

In the short term the main concern of investors is concentrated on the Middle East front where despite the different views on Iran's  attack against Israel  the risks remain high and the possible escalation will certainly have unpredictable consequences in the markets with shock situations coming back into play.

The exchange rate continues to be mainly influenced by bets on the prospect of a reduction in key interest rates by Fed and ECB.

The latest disappointing data on the course of the US economy, although still not capable of increasing the risk of a possible recession, has affected bets, with the possibilities of a more aggressive policy with bigger  reduction in interest rates having increased significantly.

These latest developments have affected the US  currency which has lost ground in relation to all major currencies but it may still be relatively early for the European currency to be able to develop a strong upward momentum breaking but above all remaining relatively easily quite above 1,10-1,12  levels.

I estimate that the last months fluctuation range between the level 1,06 - 1,10 probably with some quite sharp extensions remains in play as the main scenario for the next short to medium term period.