EUR/USD Daily Fundamental Forecast – March 19, 2018

The EURUSD pair has been trading near the lows of the range since Friday and as of today morning, there has not been much change as the FX moves have been pretty limited during this time. The pair is under pressure due to the growing strength of the dollar which has gained mainly due to the anticipation over the Fed meeting this week.

EURUSD Nears Range Lows

The market expects the Fed to make its first move for this year with a rate hike but it remains to be seen whether that would be enough to spur the dollar bulls on further or whether the market would be needing much more than that. This is where the dollar is likely to slip as the market expects the Fed to push through accelerated rate hikes during the course of the year which would help the Fed to make 4 rate hikes in total for this year. While the market may expect the Fed to give some sort of a confirmation of that during the meeting this week, that might be asking for something too soon.

The Fed has always made it clear that it is dependent on the incoming data and unless there is some sense of strength in the data, it would be difficult for it t push through rate hikes for the sake of it. A similar viewpoint is likely to emerge this week as well which could disappoint the markets in the short term, such is the level of anticipation. If that is the case, then the euro is likely to get a respite and bounce once again from the lows of the range which could then push the euro further towards the range highs.

Looking ahead to the rest of the day, we have the G20 meetings during the course of the day and that is unlikely to have too much of an impact on the euro or the dollar and hence we should see some consolidation happening at the lows of the range.