EUR/USD Fundamental Analysis – week of May 7, 2018

The EURUSD pair continued to suffer for another weak as the break through the lows of the range meant that the pair went into a free fall in the direction of the breakout. We had said in our forecast last week that once the break was confirmed, the next target of the bears would be the 1.20 region and thats where the pair reached for during the course of last week.

EURUSD Breaks Through 1.20

Not only that, the pair continued its move lower and lower breaching the 1.20 region in due course of time and it ended the week lower than the 1.20 region which is a further sign that more weakness is along the way in the short term. This was despite the fact that the NFP employment data came in weaker from the US for this month as well though the figures were revised higher for the last month. This is something similar to what happened last month as well and just as how that did not stop the strength of the dollar, we believe that this would not be enough to stop the growing strength of the dollar as well.

It is unlikely that the dollar strength is going to give way anytime soon and hence we can safely say that the euro would be under pressure going forward in the short and medium term as well. The pair has broken through a strong range that has been in existence for more than 2 months and with the bears being able to sustain this break at this point of time, it should show that the bears continue to be in control.

In the upcoming week, the focus begins to shift away from the dollar with only the speech from the Fed Chief and the PPI and the CPI data from the US being on the horizon. There is not much news from the Eurozone as well and so we can safely expect the weakness in the Euro to continue in the upcoming as well. There may be a small correction of the downtrend during the course of the week but that is unlikely to lead to a reversal at any point in the near future.