EUR/USD Daily Fundamental Forecast – February 28, 2018

The EURUSD pair slipped lower during the course of trading over the last 24 hours as the testimony from the new Fed Chief Powell was enough to bring in some much needed strength to the dollar. The dollar had been choppy since the beginning of the week as we headed towards the end of the month and also due to the fact that the market was waiting in anticipation for what the Fed would do.

EURUSD Bearish

Many of the Fed members, over the last few days, have expressed the opinion that they should be some accelerated rate hikes from the Fed for the monetary policy to keep pace with the economy but the market was more eager to know the thoughts of the new Fed Chief. He made his debut at Capitol Hill and managed to send the dollar higher by sounding as hawkish as he can be. He expressed confidence in the economy and also in the way that the monetary policy was laid out.

He also sought to assure the markets that the economy was not on a path to slowdown and that the markets were right in moving higher. This was what the dollar bulls wanted to hear and they showed their appreciation by buying the dollars which sent the EURUSD pair back below the 1.23 region and it now trades just above the 1.22 region as of this writing and looks very weak.

The pair has broken through the important support around the 1.2240 region but it remains to be seen whether it can hold the break. If that happens, then the bears are firmly in control and this should then accelerate the losses towards the 1.20 region in due course of time. Looking ahead to the rest of the day, we have the flash CPI data from the Eurozone and we also have the advance GDP data from the US and a combination of these could place even more added pressure on the pair. We have been advising in many of our forecasts that the dollar is likely to strengthen in the medium term and now we are seeing the beginning of the same.