EUR/USD Fundamental Analysis – Week of October 10, 2016 – Forecast

A reluctance of the EURUSD pair to go up or down in either direction is the fact that in the week when its cousin, the GBPUSD pair, has had some historic weekly volatility, this pair continues to sit within a 140 pip range, nothing new and nothing out of the ranges already defined and explained. This was also the first week of the month with loads of news from different parts of the world including the NFP from USA but still none of it was enough to improve the volatility in the pair or help the pair break out of its defined ranges.

The past week was slightly better than the previous one in that there was quite good up and down movement but all this was within range which helped the range traders a lot but these movements continue to be a headache for investors and long term traders who cannot position themselves for a bullish run or a bearish run. We have already defined, what we believe, is the fundamental reason for this. The ECB and the other banks in the Euro region cannot afford two weak currencies in their midst ever since Brexit vote happened and it has become very important for them to keep the euro afloat under all circumstances so that it can be used as a tool to keep the economies of the different countries in the euro region afloat and also show to the rest of the world that all is fine.

With this in mind, we continue to believe that the euro will trade within a range for this month as well. In the upcoming week, we have the FOMC minutes which is likely to cause some volatility but with the statement most likely to be a rehash of what is already known, we expect the volatility to not last very long and we should be back trading within the smaller range of 1.1150 and 1.1250 and if that breaks, move on to the larger range of 1.1050 and 1.1350. Trade the ranges and as long as you keep your SLs tight, you should be fine.