EUR/USD: It's ECB day with 1.1000 level at risk of collapse

The single European currency is a breath away from the 1,10 level pending a crucial decision from the European Central Bank with the most likely scenario of a 25 basis point rates cut.

Αlthough the course of inflationary pressures has shown clear signs of easing, the 2% target set by the European Central Bank is still far away but on the other hand central bank officials would not want to risk the possibility of a recession on the European continent.

A conservative decision to cut interest rates by 25 basis points gathers enough supporters on the ECB board so any other decision would be a big surprise at today's meeting.

Yesterday was largely calm and the exchange rate movement remained in a narrow range as US  consumer inflation announcement did not surprise with the core inflation index coming in slightly higher than estimates.

The persistence of inflationary pressures in US almost eliminated the possibility of a 50 basis points cut in key interest rates at the Fed's meeting on September 18.

This development appears to temporarily favor the US currency as combined with today's possible interest rate cut by the European Central Bank the interest rate gap in favor of the US currency remains on the table.

In addition to the Ecb meeting and President Lagarde's speech which are sure to monopolize interest, today's agenda includes the weekly jobless claims from the United States as well as the producer price index.

The overall picture of the market seems to favor the US currency at the moment with the possibility of  1,10 collapse being elevated, however in an environment with a hot agenda and important announcements with the risk of surprises  I prefer to remain on hold.