EUR/USD Daily Fundamental Forecast – January 29, 2018

The euro has been moving lower in what should be deemed as continuing and worrying signs of loss of momentum for the euro bulls. This move lower did start on Thursday after Trump had let his preferences known when he said that he felt that the dollar should be stronger considering all the good economic data that is coming in from the US. This laid a full stop to the feeling in the markets that the US would prefer a weaker dollar.

EURUSD Moving Lower

With Draghi also refusing to be drawn into a debate on whether the euro is too strong or not, it was felt that no one cared for the dollar but the comments from Trump has changed all that. Since that time, the dollar has gone about trying to get itself out of the hole that it has dug itself into, since the beginning of the year and this has led to the strength of the dollar increasing which has in turn led to the EURUSD pair moving towards 1.24 after trying to make a strong breakout through the 1.25 region.

We are heading towards the end of the month and so we are likely to see a lot of trade flows and trade positioning as the traders build up positions for the new months ahead. We will also be seeing some important data from the US, including the NFP, later in the week. This month would also see the new Fed Chief Powell taking up his role and with all this happening, there is a growing anticipation among some traders that the incoming data would be strong and that this would help the Fed to hike rates in March and ensure that there are 3 rate hikes this year.

For now, it is the first day of the week, when traders are getting back to their desks and there is not much economic data floating around and so we can expect the market moves to be minimal with a bullish bias for the dollar. We do expect the 1.2380 region to hold for the pair in the short term but if the dollar strength grows, then we should see the pair moving lower.