EUR/USD Monthly Fundamantal Forecast – October 2016

By:

Updated: Oct 1, 2016, 03:12 UTC

If you though that August's month range of 300 pips was small enough to lull you into slumber, you didnt anticipate September i guess. September was the

If you though that August’s month range of 300 pips was small enough to lull you into slumber, you didnt anticipate September i guess. September was the month when one of the most anticipated announcements of the year was scheduled with the Fed rate statement on Sep 21, on the same day that the BOJ revealed its new monetary policy. You wouldnt have been blamed if you had expected an explosive month full of volatility and liquidity before and after the meeting but what you got was a month with even smaller range of 200 pips. A range of 200 pips for an entire month for a pair which is supposed to have a daily average range of 85-95 pips atleast.

EURUSD Monthly

This is a surprise but it isnt a coincidence by any means. We have been saying repeatedly that ever since the Yes vote for Brexit and the fall in the value of the pound, it has been in the interest of the European banks and the economies to keep the Euro under a strict range and ensuring that it doesnt fall as the last thing that they want to do is to deal with 2 weak currencies. Thats one of the reasons why the Euro has been propped for the whole month of September and any kind of event or non-event has little to no impact on the price. The price continues to range between 1.1050 and 1.1250.

Looking ahead to October, there is no specific major event to look forward to apart from the usual monthly meetings and data releases like the NFP. With the market looking for a rate hike from the US towards the end of the year and with the US Presidential elections scheduled for December, the lead up to both could cause some volatility and any data release that greatly affects the chances of a rate hike (Like the NFP) could also cause volatility. All said and done, we expect the ranging to continue in October and unless there is a clear break of 1.1050 or 1.1250, we are in for another boring, lumbering month of trading in the EURUSD though it would be a delight for range traders.

About the Author

Colin Firstauthor

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