EUR/USD: The Euro remains steady in a week of stormy agenda

January 17, 2024 10:54 AM +07:00 - The European single currency remains in mid-1,05-1,06 level as investors shy away from taking big bets ahead of a stormy week of major macroeconomic news. 

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Friday did not provide any surprises, the range remained limited as the exchange rate remains locked in the 1,05  - 1, 07 levels.

Geopolitical developments continue to be high on the agenda and currently act as one of the key counterweights in the European currency's to regain mild upward momentum.

We are at the start of a week where there is a stormy of major macroeconomic news with inflation indicators,  growth path in the eurozone and the US Federal Reserve's meeting a standout.

Τhe overall market picture continues to favor the US currency as the different pace between the two economies remains on the table while geopolitical concern clearly favors the US dollar which traditionally functions as a safe haven currency.

However, the characteristic of the European currency showing good reactions is back in play and last week was the 4th in a row where the European currency remains locked between the levels of 1,05 - 
 1, 07 showing a picture of stabilization.

The exchange rate seems to have fully digested these levels and now the next big move will depend on the coming announcements as well as the developments in the geopolitical landscape.

But as it stands to reason after the last four weeks this levels being digested the possibility of new local lows is more elevated especially if this week's macroeconomic announcements and the Fed's meeting on Wednesday evening increase the possibility of another increase in key interest rates in US. 

The chance of that happening on Wednesday is extremely slim but the rhetoric from Fed's Chairman about some next move is likely to come back on the agenda.

While surprises that will improve the image of the European economy and its prospects and limit the aggressive rhetoric of the Fed are logical to lead the European currency back to the fore with the level of 1.07 could be under challenge again.

As the forecast for the announcements as well as the developments in the geopolitical environment are extremely uncertain I remain in my basic strategy to wait for some sharp dips in order to position myself in favor of the European currency as I estimate that the reactions will remain in the game.

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