Anna 
On the first trading day of the week, the euro encountered mild downward pressure, signaling a retreat from recent highs of 1.1017 achieved in November. While the euro’s impressive rise during the previous month has tapered off, there are no imminent signs of a significant plunge in December.
The overarching narrative in the market remains consistent, with the primary focus on the outlook for inflation and the trajectory of key interest rates in the eurozone and the United States.
Last week provided indications that inflationary pressures in the eurozone were diminishing, exerting a downward pull on the euro. The single currency has undergone a correction of more than 150 points, and market analysts anticipate a fluctuation range between 1.08 and 1.10 in the days ahead.
The agenda for today includes speeches from European Central Bank (ECB) officials, including ECB President Christine Lagarde. While no surprises are expected in their statements, the ECB’s recent stance is unlikely to undergo substantial changes.
The latest data reflecting efforts to contain inflation in the eurozone has brought the possibility of a key interest rate cut closer in the first quarter of 2024. However, analysts emphasize the need for fresher data to draw more accurate conclusions.
The decision to remain on the sidelines for now, despite missing an opportunity to go long on the USD at 1.10, is grounded in the expectation that the market will undergo a digestion phase at its current price levels before the next significant move.
Investors are reminded of the impending release of non-agricultural data from the United States at the end of the week. Any surprises in the data are poised to induce substantial fluctuations in the exchange rate, underscoring the potential impact of economic indicators on currency markets. Traders and investors are advised to stay vigilant as the week progresses, with an eye on developments that could shape the direction of the euro in the coming days.
