Vasilis Tsaprounis
Independent Analyst
The single European currency is under mild pressures in the early hours of Tuesday, again approaching the 1,11 level.
The general picture of the market remained unchanged during yesterday's day as the rich agenda with the speeches of the Presidents of the Fed Jerome Powell and ECB's Lagarde did not give any surprise.
Once again there were the comments on the Central Banks battle to control inflation that is on the right path, but without surprises on the future decisions from the Fed and Ecb.
The European currency continues to struggle to move higher and last year's highs of 1,1270 remain the main challenge for now.
Although there is some distance from the next Fed and ECB meetings, bets on the intentions of further reduction of interest rates continue to monopolize the interest and influence the course of the exchange rate.
Although the gap in the difference in interest rates has narrowed after the latest reduction of 50 basis points by Fed, the difference remains in favor of the American currency, and along with the concern about the course of the European economy remains at the moment the two main weights in the effort of the European currency to move much higher approaching the levels of 1.14 - 1.15, which in my view may be the higher prices that the European currency could achieve until the end of 2024.
Although the Fed appears to be moving more aggressively in the rate cut cycle, the completion of the cuts is expected to find the US dollar offering higher interest rates relative to the European currency. May the gap will have shrunk but it will continue to favor the American currency.
Today's agenda has enough interest with Eurozone inflation data that could feed fresh bets on the ECB's next decision, while on the other side of the Atlantic the ISM index for the manufacturing sector stand out.
No change in my thinking, I remain on hold without moving away from the desire to buy the US currency at some new sharp peak.
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