The single European currency has retreated close to 1,08 levels and is struggling to maintain these levels.
The mild bearish momentum that has been maintained since the beginning of the month remains in play and already the exchange rate is down over 200 basis points from the high of 1,1017 it hit on November 29.
The behavior of the market during yesterday justified the thoughts as reflected in yesterday's article as the exchange rate remained in a narrow range of fluctuation near the 1,0850 levels without any major surprise.
Announcements and some statements from officials brought nothing new to the table and Momentum remains slightly bearish as bets on a shorter cut in key interest rates by the European Central Bank have appeared on the table.
At the same time, relative fatigue has appeared on the horizon in the latest rise of the international stock markets, something that if it takes on a greater extent is expected in turn to further strengthen the US currency which traditionally functions as a safe haven currency.
Also let's not forget that the geopolitical situation remains unsettled and developments in the Middle East remain dramatic, with potential escalation remaining some possibility.
In such an environment restoring the European currency to a strongly upward Momentum remains a difficult task and the scenario of the market remaining cautious with digesting behavior and with perhaps further losses for the European currency remains the most likely for now.
Today's agenda is quite rich with Eurozone producer inflation and the performance of the service sector in the United States standing out.
Possible deviations from estimates are expected to affect the exchange rate but in any case I estimate that the market will remain cautious as we go through a week characterized by important news for the United States labor sector which until Friday announces important data.
So although the European currency is in a mild downward momentum I estimate that this will not take rarge scale and there will be reaction signs which I recall that the European currency shows quite easily and with good fidelity.
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