EUR/USD Daily Fundamental Forecast – March 22, 2018

The EURUSD rose through the 1.23 in a rebound once again from the lows of the range and this is something that we have been seeing over the last few weeks. But only this time, the rebound has been more to do with the fundamentals as the dollar sold off across the board, and it was nothing to do with the technical stuff.

Dollar Sells Off

The dollar sold off following the FOMC meeting and this was largely in line with what we have been saying in many of our forecasts over the last few weeks. The market has been anticipating a bit too much from the Fed and we were pretty sure that whatever the Fed does, it would fall short of the enormous expectations of the market and this is likely to lead to disappointment and a sell off in the dollar and thats what happened yesterday. The Fed hiked the rates for the first time this year.

But this was generally expected by all the investors and traders and this was also already priced into the markets and that is why we saw that the impact of this was pretty much muted. Also, we had the rate statement as well as the first rate related press conference from the new Fed Chief Powell where he emphasised that the economy continued to be strong but he also said that he would not focus too much on the future, leaving the door open as to the pace of the future rate hikes.

This seemed to be a disappointment to the market and they showed this by selling the dollar and pushing the EURUSD pair through the 1.2350 region where it trades as of this writing. Looking ahead to the rest of the day, the focus shifts away from the Fed as we do not have any major economic news or data from the US or the Eurozone for today and we expect the region around 1.2450 to cap any sort of bullish move in the short term.