The EUR/USD currency pair has recovered remarkably well from yesterday’s trading session where it hit $1.1846, its lowest level since the beginning of April as fears hang over the possibility of around 3 interest rate hikes from the US Federal Reserve starting early next year.
The US dollar index, which shows the strength of the world’s most popular currency against a basket of six other major currencies has also hit its highest level since the middle of April which means the Euro is not the only currency at the moment being punished by the greenback.
Statistics show there was a record number of short positions against the US dollar before last week’s announcement by the Fed on monetary policy and with these trades still unwinding, it is hard to see the Euro sustaining any type of recovery in the coming week.
The Euro has managed to find support once again around the $1.1900 mark as shown on the chart, but this may be difficult to sustain as the week unfolds and especially if inflation figures due out from the US later this week come in above expectations.This may see the market price in even more rate hikes from the US Federal Reserve and as a result, more buying interest in the US dollar.
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