EUR/USD Daily Fundamental Forecast – January 25, 2018

It has indeed been a terrible day for the dollar over the last 24 hours as it got beaten all across the board yesterday. There was no respite for the dollar and the euro took full advantage of the same and continued to move higher as it broke through the 1.24 region and now trades comfortably above that region as of this writing.

Dollar Pushed Off the Edge

The dollar had been week since the middle of December and the rate hike in December from the Fed seems to have had little effect on the dollar. Yesterday, the US Treasury Secretary said that he prefers to have a weak dollar so that it would be helpful for the US economy and trade and this was the latest push that the dollar got to push it through the edge. The dollar fell hard amidst fears that the US would adopt protectionist measures to safeguard its trade and that it would lead to a global trade war with other countries also following suit.

The euro has a risk point today with the ECB meeting and a press conference from Draghi but that did not seem to faze the market by much which seemed intent on selling of the dollar irrespective of the euro. The euro seems a bit overstretched at the moment and though the economic data from the Eurozone has been strong over the last few months and has paved the way for the ECB to think about ending the QE, we believe that the reaction of the markets to this news has been a tad too much and hence the euro bulls could run the risk of a correction.

But that does not seem to matter at this point of time as the euro looks bullish but as we progress through the day, we might see some profit taking coming in as the traders try to take profits ahead of the risk event which is the Draghi press conference. That is likely to be the focus for the day today and it remains to be seen whether he would continue to talk down the euro.