EUR/USD Daily Fundamental Forecast – February 15, 2018

The EURUSD pair had an interesting and volatile day yesterday which is something that was expected considering the fact there there was a slew of data from the Eurozone and the US as well. Though the news from the Eurozone did not seem to have much of an impact, the incoming data from the US had a large impact on the strength of the dollar and this helped the pair to move higher.

EURUSD Shoots Higher on USD Weakness

The focus of the day yesterday was clearly on the dollar as the CPI data and the retail sales data were to be released from the US. These are the 2 most important data points, apart from the NFP report, from the US that is released every month and expectations were high that these would also exceed expectations, as has been the case with much of the incoming data from the US over the last few weeks. But what we do was mixed data as the inflation data came in stronger than expected while the retail sales data came in weaker than expected. This sent the dollar scurrying higher initially.

But on closer look, the inflation data on a year on year basis did not have too much of a change and a realisation of this, along with the weak retail sales data, led to a quick reversal of the dollar strength and the whole move down was reversed and since then, it has all been one way traffic with the EURUSD pair breaking through 1.24 and now is clearly targeting the 1.25 region. This region is likely to provide a large psychological resistance to the move higher and it would be interesting to see what the pair does there.

Looking ahead to the rest of the day, we have some more data from the US in the form of PPI data and this should also have an impact on the strength of the dollar. Any more weaker data would reduce the anticipation of accelerated rate hikes from the Fed and could push the pair even higher.