EUR/USD Daily Fundamental Forecast – January 8, 2018

The EURUSD continues to trade between the 1.20 and 1.21 region and it could well be the case that some large options are in play on either side and that is holding up further progress on either side for now. It has been a week of a lot of data from the US over the last week but none of that seems to have affected the strength of the dollar too much which continues to be a bit steady with a bearish tinge to it. This should have helped the euro further higher but that has not happened.

EURUSD Continues in Range

We had expected a large fall last week as the move higher in the euro over the last couple of weeks of December had been made in low volume and it is generally expected that such moves are reversed. It is to the credit of the bulls that they have not allowed such a thing to happen as yet and the pair continues to trade near the highs of its range as of this writing. The weak data from the NFP also helped the euro bulls to hold steady. As mentioned above, some option expiries could be holding up either side of the trade so far and once those options expire, we could see a large move on either side.

The euro has also been boosted by the slight progress in the talks in Germany which have reached a crucial week with Merkel reaching out to the old SPD party as her final chance to seize power. If this move fails, we could be in for another round of elections in Germany and that is likely to be a large setback for Merkel, Germany and for the Eurozone as well as it could only add to the uncertainty, something which the market seldom likes.

Looking ahead to the rest of the day, we do not have any major data from either the US or the Eurozone for today and so we expect the consolidation and ranging to continue for the rest of the day. We should see an attempt at both the range ends but as long as the hold, this ranging would continue.