US Dollar returns to the fore as hot inflation remains on the table

The European currency is trying to balance and avoid further losses as the 1,09 level has already retreated in the wake of yesterday’s announcement on the path of US producer inflation which showed that inflation remains hot and the outlook for cuts in key interest rates for 2024 they are likely to be limited.

At the same time, Retail Sales in the United States, although they remained in positive territory, missed analysts’ estimates, creating favorable ground for a small correction in American stocks, which in turn favored the US currency, which is well known that act as a safe haven currency.

Ιn any case the temporary collapse of 1,09 level cannot be seen as a major change in the foreground, as for now the movement is limited in scope to consider that the US currency has developed some strong upward momentum.

Τhe behavior of the market in general confirmed my thinking as expressed in a previous article as although I maintained a wait-and-see attitude I expressed the view that the possibility of the European currency once again coming under question was slightly increased.

Today’s agenda features US Industrial Production and the   University of Michigan’s survey of consumer sentiment. As the US economy is sensitive and very dependent to consumption, the University of Michigan’s research is expected with particular interest.

As the outlook for a change in monetary policy from Fed and ECB is relatively balanced and the interest rate differential remains as it is the US dollar appears to have a slight edge, as yields on US treasuries continue to be attractive and any high prices of Euro could be considered as a good levels for dollar purchases.

I remind my strategy of the last period to prefer to position in favor of the European currency after some sharp dive,  which justified me although I failed to find the entry point.

It is possible that the US dollar has room for further rise, however I prefer to stay on hold and assess the possibility of buying the European currency at much lower levels.