The single European currency has retreated from highs of 1.12 and is struggling to stay above the 1.1150 mark as the recent upward momentum is already showing clear signs of fatigue since yesterday.

Yesterday brought no surprises and the macroeconomic data released were close to estimates.

The exchange rate continues to be determined almost exclusively by bets on interest rate cuts by the Fed and the ECB.

Although several days have already passed, the latest macroeconomic fundamentals, based on fatigue in the US labor sector and a significant easing of inflationary pressures, now give the Fed room to make the first rate cut in many months and to narrow the interest rate differential between the euro and the dollar, which has weighed heavily on the US currency in recent weeks.

Fed Chairman Jerome Powell’s speech at the Jackson Hole symposium on Friday significantly increased bets on a first Fed interest rate cut in September.

However, as the dust from Powell’s rhetoric slowly settles, speculation about the rate cut is likely to remain limited, which should limit further gains in the European currency and help the US currency to improve.

There is undoubtedly nothing particularly important on today’s agenda. The growth rate of the German economy, announced a little earlier, was no great surprise, and the consumer confidence index is expected in the USA later this afternoon.

I see no significant reason to change my opinion, as stated in previous articles, and currently maintain my position in favor of the US currency from the 1.12 level.