The single European currency is trading near 1.0850 levels in the early trading hours of Friday, having moved away from yesterday’s lows as in the wake of the European Central Bank’s decision to cut key interest rates by 25 basis points and President Lagarde’s speech the exchange rate touched 1,08.
Ecb’s decision was fully expected and did not surprise the markets while President Christine Lagarde’s statements maintained the same rhetoric, she repeated the central bank’s aproach that each decision will depend on macroeconomic data, maintaining concerns about the course of the european economy.
The first reactions of the market were characterized by intense volatility and temporary pressures against the European currency which, however, did not take a large extent and as a result the critical level of 1.08 did not collapse.
The reaction of the European currency near the level of 1,08 has for now fully confirmed my thinking as it was expressed in previous articles as I was targeting the level of 1,08 for a possible long position in favor of the European currency with the aim of some good rebound.
As the dust from the ECB decision slowly settles the overall market picture is expected to remain the same with geopolitical developments and concerns remaining high on the agenda.
The developments on the Middle East front with possible escalation remaining a major risk, while further concern could cause a further escalation in the Asia region between China and Taiwan.
Today’s agenda is relatively poor in macroeconomic news with the only standout being Housing Starts in US, so interest shifts to statements from several Fed officials who have a fairly busy schedule.
Bets are currently moving at very high levels relatively over 90% on the possibility the Fed cutting interest rates by 25 basis points at the next meeting.
Exchange rate’s drop near the 1,08 levels has currently triggered my thinking to buy the European currency with the aim of some good reaction which I will keep on the table, although the possibility that the 1.08 level being found very soon again under challenge remains high.
