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EUR/USD Fundamental Analysis – week of October 23, 2017

By:
Colin First
Published: Oct 21, 2017, 03:18 UTC

The EURUSD pair spent another week in a consolidation mode and though there has been a bit of volatility over the last week, it basically ended the week

EURUSD Weekly

The EURUSD pair spent another week in a consolidation mode and though there has been a bit of volatility over the last week, it basically ended the week going nowhere. This has been the situation with the pair since the last few weeks where the pair has been caught in a 300 pip range between the 1.17 and 1.20 regions and there has been no fundamental push from the US or the Eurozone to make the pair move on either side anytime soon.

EURUSD Stuck in Range

The market would have expected some push to come at the beginning of the month in the form of incoming data from the US but as has been the case over the last couple of months, the data from the US continues to be choppy making the rate hike decision in December a doubtful one even at this point of time. Though some of the Fed members have been publicly advocating for one more rate hike in December, it would be difficult for them to push for the same if the incoming data continues to be weak.

EURUSD Daily
EURUSD Daily

Over the past week, the only major positive for the dollar was the passage of the tax reform bill by Trump and his team which shows that he is beginning to gather support from his own party. This augurs well for future bills as well and this should help them to get a push on from the policy paralysis that they seem to be stuck in right now. This pushed the EURUSD pair back towards its lows during the later part of the week but ultimately the pair recovered as the euro continued to hold steady during the course of the week.

Looking ahead to the coming week, the market would be looking forward to the ECB press conference later in the week where Draghi would be expected to address the issue of QE tapering. It remains to be seen what the exact plan and the timeline is for tapering and this is likely to have a bearing on the pricing of the euro. Also, we have the advance GDP data from the US which is also something that the market would watch out for. The market expects the ECB to push on with tapering soon and if there is any indication of that, then we should see the euro strengthen. Else, the euro is likely to move lower on the back of dollar strength.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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