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EUR/USD Fundamental Analysis – week of January 15, 2018

By:
Colin First
Updated: Jan 13, 2018, 11:44 UTC

The pair rose higher on the back of a hawkish ECB and also the reports from Germany where Merkel seems to have managed to string together a coalition

EURUSD Weekly

It was a huge week for the euro as the pair broke through some of the major resistances and sought to make some new highs during the course of the week. The week had begun in a slow and steady manner and there was also a period of correction during the first half of the week as the dollar managed to steady itself and rose slightly during this period. This caused the pair to fall through the 1.20 region and trade briefly below the 1.19 region as well.

EURUSD Has a Cracking Week

This move led to the belief that further weakness could be along the way in the EURUSD pair as the pair broke through the 1.19 region but this turned out to be only a short term move. The trigger for the reversal in the fortunes of the euro came about on the release of the ECB meeting minutes from December. The minutes showed that the members had expressed confidence in the way that the Eurozone economy was moving towards. They expressed happiness in the way the inflation was moving as well and they felt that it would be sometime soon that they should start looking at shifting away from the current policy.

EURUSD Hourly
EURUSD Hourly

This was the first clear and public indication from the ECB that they were looking for a shift and this signalled that the QE would end towards the third or the fourth quarter for this year. There was also belief that the ECB could raise the rates as well and this would mark a total shift in the policy. This hawkish meeting minutes was enough to bring about a reversal as the pair broke back through the 1.20 region and headed towards the 1.21 region. Late in the week, the euro got a further boost from Germany as Merkel seems to have clinched a deal for forming a coalition government and this would help to maintain continuation of her policies in Germany.

This pushed the pair through the 1.21 region it closed the week just below the 1.22 region. In the coming week, we can see further bullishness in this pair as a continuation of the move that we have seen. The week may begin with a slight correction but with the lack of major news from the US and the Eurozone in the coming week, we should see a continuation of the bullish move which should bring 1.23 and 1.24 into the picture.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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