EUR/USD: Euro on hold between 1.1350 - 1.1400 ahead of ECB meeting and President Lagarde speech

The single European currency is trading just above the 1.1350 level in the early hours of Thursday in a narrow trading range as investors eagerly await the European Central Bank meeting and President Christine Lagarde's speech that will follow.

Any result beyond a 25 basis point cut would be a big surprise and likely to cause a severe shock to the markets.

Beyond the expected European Central Bank meeting, investors continue to have the issue of tariffs and the enigmatic personality of President Donald Trump high on their agenda.

The ambiguous policies and frequent changes in his agenda regarding the approach to tariffs with various trading partners have affected America's credibility, something that risks becoming more widespread and hitting US government debt securities more severely.

Such a possible development, although it has limited chances, constitutes the biggest risk for the US dollar at the moment, perhaps even a bigger risk than a possible recession into which the US economy could enter.

At the same time, on the other side of the Atlantic, the Old Continent is facing its own challenges. Economic activity is still limping, while significant questions remain about the political stability of some major European economies.

As the 25 basis point cut decision is almost a foregone conclusion, investors' attention will be focused on President Lagarde speech, which could provide some direction to the exchange rate with her statements.

In such an environment of uncertainty and developments, I would prefer to remain in a wait-and-see attitude, while maintaining a small position in favor of the American currency, unfortunately from lower levels, expecting a further decline in the euro in order to disengage.