EUR/USD Daily Fundamental Forecast – January 15, 2018

The euro closed the day on Friday on a very strong note as the weakness in the dollar reached alarming proportions and this, coupled with the inherent strength in the euro, was enough to bring in a big day for the euro bulls which pushed the EURUSD pair through 1.21 and then through 1.22 and it closed the week slightly below 1.22 making it a very hawkish week for the pair. The pair has managed to hold steady today morning as well and we believe that the upmove is not over as yet.

EURUSD Pushes Through 1.22

The euro has been bullish ever since the ECB released the minutes of its meeting in December. In that, for probably the first time, they talked about a gradual shift in policy which would mean that they are looking to end the QE by the end of the year. Some part of the market also believes that they could be raising the depo rates during the fourth quarter of this year and a combinaion of these has been enough to push the prices higher as far as the euro is concerned.

The euro got a further boost on Friday from reports that said that the German leader Merkel has been able to bring about a deal with one of the parties for forming a coalition and this would help to bring to an end, the uncertainty surrounding the formation of a government after months of negotiations. This also removes the possibility of another election being called and this added to the bullishness in the euro. The dollar, on the other hand, has been on the backfoot for much of the period since the beginning of the year and it continues to push the dollar lower.

Looking ahead to the rest of the day, it is a bank holiday in the US while we do not have any major news from the Eurozone for today. This is likely to keep the dollar under pressure though the traders should look out for a correction in the uptrend which could carry the pair towards the broken resistance at the 1.21 region before it begins to move higher.