EUR/USD Daily Fundamental Forecast – March 13, 2018

The dollar spent most of the day yesterday moving steadily lower during the period and it looks as though the pair would continue to trade steady for most of the day today as we await the inflation data from the US later in the day. It is likely to be an interesting day and with the consolidation having been dealt with, during the course of the day yesterday, it is probably time for some action in the markets.

EURUSD Grinds Higher

The slight weakness in the dollar began last Friday on the back of weak wages growth. Though the NFP employment data came in much stronger than expected, the average wage earnings showed a dip and this meant that only low quality jobs were added to the economy. The initial reaction was for the dollar to be bought and thus strengthen but once it was realised that the wages did not grow and hence the growth in the employment data was not of much use, the dollar began to weaken.

That weakness continued during the course of the day yesterday as well and it seemed as though the euro would be able to pull itself out of the woods. The key here would be the region around 1.2240 which has been acting as a strong support for the past couple of months. There was an attempt to break through this region a couple of weeks back but the bulls managed to pull the euro back to safety and this is likely to be the region of battle between the bears and the bulls in the days ahead.

To add fuel to the battle would be the inflation data from the US later in the day. Though it is unlikely that the inflation data would lead to a re-think on rate hikes from the Fed in the days ahead, as far as March is concerned, it could lead to a slight hesitation as far as the rest of the rate hikes in the coming months are concerned. Hence the dollar bulls would hope that this piece of data would continue the trend of strong incoming data from the US and if this happens, we could see the support around 1.2250 coming under threat again.