The single European currency is trading just above the 1.16 level, having suffered losses yesterday as Fed Chairman Jerome Powell’s speech to Congress on Friday began to fade, with the European currency’s momentum weakening .
In addition to the front that has opened between President Donald Trump and Fed Chairman Jerome Powell, which remains active, the US President has opened a new front with one of Fed’s Governor Lisa Cook, whose removal he is calling for.
Although the bets have changed significantly in favor of the possibility that the Fed will proceed with a 25 basis point cut in interest rates at its next meeting in September, yields on US government debt securities remain at attractive levels with the 10-year bond continuing to offer yields close to 4.30.
In general, apart from the new messages given to the markets by the Fed chairman, there are no other significant changes, with the exchange rate remaining ”heavy” as investors are wary of taking big bets.
After the highs of 1.1830 in June, the European currency has lost its momentum and has been confined to a consolidation environment as although several large investment houses see prices well above 1.20, there are several thorns in this perspective.
One of the most significant thorns is the anemic growth of the European economy, which could be called into question if the exchange rate moves significantly in favor of the euro, which, combined with the turmoil over trade tariffs, could hit eurozone exports hard.
On today’s agenda, Durable Goods orders in the United States stand out, which are always watched with interest by investors.
The return of the exchange rate to lower levels partially confirmed my idea of positioning in favor of the US currency, although once again I failed to find the right entry point as I was expecting prices considerably higher.
I will keep the same thoughts as I believe that sell at peaks right now is probably a good strategy.
