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EUR/USD Daily Fundamental Forecast – October 13, 2016

By:
Colin First
Published: Oct 13, 2016, 02:14 UTC

The USD strength was the theme for most of yesterday until the FOMC statement was released. Even the normally resilient and rangy pair of EURUSD could not

EUR/USD Daily Fundamental Forecast – October 13, 2016

The USD strength was the theme for most of yesterday until the FOMC statement was released. Even the normally resilient and rangy pair of EURUSD could not sustain the onslaught and the pair broke through its strong support at 1.1050 and reached as far as the 1.1100 region just as the US session began. The growing uncertainty over the Brexit process and the fears of a soon-to-be rate hike from the US led to a general risk off sentiment across the markets and this is usually favorable for the USD as it is considered as a stable currency and generally the funds, that look for stability and better returns, get locked into USD during times of high risk. So, the USD strength was the theme overall as the EURUSD pair awaited the FOMC statement that was to be released during the middle of the US session.

EURUSD Hourly
EURUSD Hourly

The Brexit debate in the UK parliament added to the volatility and uncertainty and it was a generally difficult market to trade. That the risk off was the dominant theme was evident from the fact that there was no negative news from the Euro region for most of the day but still the Euro continued to weaken against the USD for most of the day as the market awaited the FOMC. The minutes were released towards the middle of the US session and as expected, it did not add anything new to what was already known. There were 3 dissenters in the Fed who wanted to hike rates NOW but this information was already known and has been in the public domain for sometime.

The market somehow interpreted this as being a hawkish tone and it helped in the continuation of the USD strength which made the EURUSD pair crash towards its support at 1.1000. Somehow, despite the onslaught, the round figure of 1.1000 managed to hold and as of this writing, the pair has jumped up 30 pips due to weak trade balance from China. We are near some heavy buying regions at 1.10 and 1.0970 and unless these are broken clearly, we continue to believe that this pair is range bound and hence ripe for a bounce towards 1.12 again as it is now at the bottom of its range. Those who believe the same can risk a long at this price with a SL below the range bottom, if they can afford that.

For today, there is no major news release from the Euro region with the unemployment claims and crude oil inventory from the US to be released during the US session. These are known to cause some light volatility but are not major market movers.

 

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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