EUR/USD Daily Fundamental Forecast – March 23, 2018

The EURUSD pair has turned to some choppy trading as the focus has shifted from the Fed and the US to geopolitical tensions and also the threat of a major trade war breaking out. This has forced the euro on the backfoot though the investors around the world are confused on how to deal with the situation and whether or not this is favorable for the dollar.

EURUSD Choppy

The trade war between the major countries escalated over the last 24 hours with the US administration signing a plan to impose tariffs on Chinese goods and this is the first time that such an action has been taken but they also said that this could be the first of many. This tariff plan is worth over $60 billion and the Chinese have also responded to this by adding tariffs to steel and aluminium from the US in the first step of what is likely to be many. This is a continuation of the policy of the US to favor nationalism and we believe that this is not going to end anytime soon.

The Eurozone has also chipped in with their own comments on the ongoing trade war keeping their options open for retaliation if any such action is taken against them. As we have been saying many times over during the last few weeks, a global trade war is not good for any of the economies around the world and since this is the first time that such a threat is breaking out, many of the traders are confused on how they need to respond to such a situation and it remains to seen on what further developments are there along the line.

The Euro has turned choppy due to all these developments and it is likely to take a bit of time for the markets to settle down but we can be sure that we have not heard the last of this threat and this could determine the direction of the markets in the short and medium term. Looking ahead to the rest of the day, we do not have any major economic news or data from the US or the Eurozone but the fundamentals are likely to take a back seat as the markets focus on the reactions to these developments.