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EUR/USD Daily Fundamental Forecast – April 25, 2017

By:
James Hyerczyk
Updated: Apr 25, 2017, 13:09 UTC

The EUR/USD is trading higher, but inside yesterday’s range. There was no follow-through to the upside after yesterday’s strong surge

EUR/USD Daily Fundamental Forecast – April 25, 2017

The EUR/USD is trading higher, but inside yesterday’s range. There was no follow-through to the upside after yesterday’s strong surge, but the market is continuing to hover just under a five-month high. Yesterday’s rally was the biggest since June 2016. The catalyst was the strong performance by Emmanuel Macron and Marine Le Pen in the first round of the French presidential election.

Macron is considered market friendly. He is also being projected as the next President of France after recent polls showed him with a commanding lead over Le Pen. Since he is the front-runner, I think Euro traders have fully priced in his win. Therefore, I have to conclude that if Le Pen starts to close the gap in the polls then the EUR/USD will likely start to attract sellers.

EURUSD
Daily EUR/USD

Macron’s win on Sunday has increased confidence in the markets for higher risk assets. It also means that political risk is being priced out or was priced out on Monday. Traders are saying that implied volatility, which is an option used to hedge against big future price swings, has fallen sharply.

With the markets pricing out the risk of a Le Pen victory, traders can now focus on the next piece of business, the European Central Bank’s monetary policy meeting on Thursday. Although it is not expected to announce that it is winding down – or “tapering” – its asset purchase program until later in the year, which should be supportive for the Euro.

It was a light day as far as economic data was concerned. The total value of new orders received by the German construction industry increased 2.0 percent sequentially in February. On an annual basis, construction orders grew 4.8 percent in the month.

In other news, European Central Bank policymaker Ewald Nowotny said in an interview to the Australian newspaper Der Standard that uncertainty about the future measures of the Trump administration is particularly worrying and the problems from Brexit may be underestimated as of now.

Today’s U.S. reports include the monthly HPI which is expected to show a 0.1% increase. The S&P/CS Composite-20 HPI report is expected to show an annual 5.7% increase.

The Conference Board’s Consumer Confidence report is expected to come in at 123.67, down from 125.6. New Home Sales are expected to come in at 590K units, down from 592K. The Richmond Manufacturing Index is forecast to come in at 18, down from 22.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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