The single European currency is in a stabilizing environment well below the 1.07 level in the wake of a stormy week with major announcements and the European Central Bank’s decision to raise interest rates by 25 basis points, but minimizing its aggressive rhetoric .
There is no longer a bet on the table for another hike in key rates from ECB and the characteristic is that now bets are starting to be made about when the first interest rates cut will happen.
In any case, although inflationary pressures show signs of abating, they remain at levels intolerable for the European central bank and it is extremely difficult to have any reduction until the end of the year.
As now the European central bank does not have much to offer in the game all the interest is concentrated at the next United States Federal Reserve meeting where it will make its own decision on a possible further increase in key interest rates.
So far the US economy has responded well to high interest rates and although growth rates have been limited the risk of a recession has largely receded.
Νevertheless, my assessment is that the continuation of the increases can escalate the climate of uncertainty in the US banking environment and although so far calm has returned to the banking sector , the systemic problems have not been erased.
For the time being, the developments may weigh on the European currency, which has been called into question in recent weeks, but I believe that its main characteristic of good reactions will soon return to the fore.
Today’s agenda is relatively indifferent and likely to favor the stabilization climate for the single European currency without major changes.
Τhere is no significant divergence in my thinking as expressed last week to maintain positions in favor of the euro at current levels.