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EUR/USD Fundamental Analysis – week of January 8, 2018

By:
Colin First
Published: Jan 6, 2018, 03:08 UTC

The euro ranged and consolidated over the week as the market returned back from its holidays

EURUSD Weekly

The EURUSD pair had a difficult week where it struggled to break through the highs of its range. It was a week of consolidation and ranging but what should make the bulls happy is the fact that the euro managed to close above 1.20 for the week which should give them a lot of hope for the coming week.

EURUSD Looking to Consolidate

It was the first trading week of the year but it was a truncated one as Monday was a holiday and hence only 4 days of trading was possible. The most important focus for the week was whether the dollar would be able to make a comeback after being battered over a period of 2 weeks on low volume towards the end of last month. The fact that the dollar weakness was on low volume led to the belief that it might be quickly reversed but none of that happened. The euro continued to be strong and traded above 1.20 for most of the week.

EURUSD Daily
EURUSD Daily

Though the fact that the euro traded strongly through the week should make the bulls happy, the fact that they were not able to push the pair through 1.21 even after 1 week of trying should concern them. We had a range of data from the US with tthe ADP employment report and the manufacturing PMI data coming in stronger than expected. The NFP came in weaker but there was a revision higher in the data from last month which helped the dollar to hold steady and pushed the euro lower to make it close just above 1.20 for the week.

The coming week would be the first full trading week of the year and promises to be very interesting. The volume and the liquidity in the market is expected to return to normal and it remains to be seen what the traders think of the dollar then. The region around 1.1980 is likely to show a lot of support. We also have the PPI and inflation data as well as the retail sales data from the US which should show the strength of the US economy and also hint the timeline for the next rate hikes from the Fed. A move below 1.1980 is likely to be bearish.

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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