EUR/USD Daily Fundamental Forecast – April 21, 2017

The EURUSD pair tried to make a break through the upside by moving through all the selling in the 1.0750-0780 region but the progress was stalled by heavy selling and has since dropped back below that. We had mentioned in our forecasts yesterday that this region would be a big challenge for the bulls and hence could be used as a pad for the sellers to sell into this region for the correction that is likely to follow. We got the same and the pair now trades just above 1.07 as of this writing.

Euro Makes a Round Trip

There was not much economic news lined up for yesterday but we had reports saying that Le Pen was lagging far behind in the leadup to the French elections over the weekend and this made the market happy and confident enough to invest into the euro. This was the reason for the EURUSD pair to break through 1.0750 and reach as far high as 1.0780 but it was always a question of whether the bulls would be able to hold on to the gains and push the pair higher.

We then had the US Treasury secretary Mnuchin making a speech in which he confidently said that some large cuts were likely in the US within 2017. This cheered the market heavily and this was also viewed as dollar positive and hence the dollar strengthened across the board towards the second half of the US session. This pushed the EURUSD pair back below 1.0750 and the selling gained pace and the pair now sits above 1.07 having made a round trip for the day.

Looking ahead to the rest of the day, we have the manufacturing PMI data from Germany and France but the market would be preparing itself for the French elections. A loss for Le Pen over the weekend would be cheered by the markets and we are likely to see a rally in the EURUSD pair next week.