The single European currency remains in a narrow range near the 1.09 mark for the third day in a row after last Monday’s market turbulence subsided.

The questioning of the US currency, which is mainly due to the liquidation of large positions against the Japanese yen, but also the considerable risks of a possible escalation on the front in the Middle East, are slowly being removed, with the result that calm has returned to the international stock markets and the US dollar has stabilized near the level of 1.09.

Yesterday’s weekly unemployment data in the US did not disappoint, offsetting concerns about the deteriorating labor market situation in the US that have been observed recently.

Forecasts for a more aggressive Fed policy have not changed significantly in terms of the outlook for rate cuts; the most possible scenario currently is two rate cuts in a range of 75 to 100 basis points by the end of the year.

A similar policy without any significant differences is also likely to be pursued by the European Central Bank, so that the interest rate differentials in favor of the US currency, albeit with small deviations, are likely to remain on the table in the coming months.

The gap in the interest rate differential in favor of the American currency and the fragile economy of the Eurozone remain the main weights for the European currency’s efforts to develop strong upward momentum and effortlessly break through the critical levels of 1.10 – 1.12 to which it had climbed at the end of 2023.

Today’s agenda is relatively sparse and does not contain any major announcements. The biggest risks remain in the geopolitical area.

Unless there are any major last-minute surprises, the exchange rate is likely to remain range-bound as investors are unlikely to place large bets on the last day of the week.

My thoughts have not changed; they have already been expressed in previous articles and will remain on ice for the time being.