EUR/USD Daily Fundamental Forecast – January 5, 2018

The EURUSD pair rose again yesterday on the back of even more weakness in the dollar during the course of the last 24 hours. The stock markets in the US hit record levels but that seemed to have weakened the dollar even more and the pair continues to trade at the highs of its range as of this writing.

EURUSD Continues Higher

The dollar seemed to have made a bit of a comeback a couple of days back and this would have given some hope for the dollar bulls. But those hopes evaporated yesterday as we saw more of pain for the dollar bulls and the euro rose again on the back of this. The euro has not yet broken through the highs that it had made a few days back and this should give a semblance of a chance for the dollar bulls but it all comes down to the data. The traders are still a divided lot as far as the next move is concerned and this is likely to lead to a choppy market.

The region around 1.21 has been a tough nut to crack so far for the euro bulls and it remains to be seen whether that would happen today. Some traders still believe that all the 3 rate hikes from the Fed that is expected for this year, has been priced into the markets and hence the only way for the euro is up. But another part of the market believes that the euro has risen too high too soon and also on too little volume and hence it needs to move lower first, to collect more buyers at better volume and prices levels before moving higher.

The short term direction is likely to be determined today as we have the NFP data scheduled to be released today. The ADP data came in stronger than expected and this has given hope for the dollar bulls for a stronger NFP data as well. If that does come in stronger, then we should see some dollar buying which should push the euro back through 1.20.