EUR/USD Daily Fundamental Forecast – January 24, 2018

The euro has decided to break through the 1.23 after trying for quite a long time but it has chosen the day before the ECB to do this. There were probably some option expiries in play which was holding back the euro over the last couple of weeks but irrespective of that, we find the euro above the 1.23 region and looking to move higher. The dollar is also weak across the board and this has also contributed to the move higher in the euro.

Euro Breaks Through 1.23

The dollar has been weak due to the protectionist policies of the US. This is something new but has been ongoing by the US for many years now though they have blamed other countries for following similar policies. The latest addition to that list is the new taxes/charges on imported solar panels which is likely to affect that industry. It would be interesting to see what Trump has to say about the economic policies followed by the US at the economic summit in Davos and depending on that, his speech may have an impact on the dollar.

On the other hand, the euro has been strengthening on its own as well, over the last few days as fears of a quick end to the QE have come to the fore. The economic data from the Eurozone continues to be solid and the ECB had been hawkish in its previous minutes from December and a combination of this has been leading the euro higher. This is the reason why the market is looking forward to the ECB press conference tomorrow to see whether they would use this as an opportunity to talk down the euro.

Looking ahead to the rest of the day, we have the PMI data from France, Germany and Eurozone which is likely to have minimal impact on the euro. With the break through the 1.23 in the EURUSD pair, expect some follow up bullish leg in the pair which should carry the pair towards 1.2350.