EUR/USD Daily Fundamental Forecast – March 9, 2018

The EURUSD pair fell hard during the course of trading yesterday as the pair suffered from the strength in the dollar that was seen all across the markets. The dollar managed to gain some of its strength back and this has halted the progress of the euro towards the 1.25 region, atleast for the short term. The NFP is slated for release later in the day and this keeps the market on edge as far as the short term direction is concerned.

Dollar on the Rise

The euro had been trading in a strong manner since the beginning of the week as the dollar was forced on the backfoot due to the tariff plan of the US administration as they had planned to impose import tariffs for steel and aluminium. This had led to fears of a global trade war breaking out between the major economic powers and had kept the markets in tenterhooks and on the dollar on the backfoot.

But it was only yesterday that the tariff plan was signed by Trump and when the push came to shove, we saw that the plan that was actually signed was a highly watered down version of the original plan, especially for its neighbours Mexico and Canada. The plan also kept the door open for more such exemptions for the other countries as well and this helped the investors and traders to let out a huge sigh of relief which was translated into dollar strength across the markets.

The euro now trades just above the 1.23 region as the market awaits further data in the form of NFP later in the day. A good and strong data from the US should mean that the rate hike in March would be confirmed and the market can continue to anticipate more than 3 rate hikes in total for this year. On the other hand, a weak piece of data would still mean a rate hike in March but then the market would be forced to rethink on the number of rate hikes for this year.