EUR/USD Daily Fundamental Forecast – April 27, 2017

The EURUSD pair was on the backfoot during the early part of the day as rumors began to go through the markets about the new tax plan that Trump was likely to unveil during the course of the week. The tax cuts were expected to be massive and the dollar rose in anticipation of that and hence this pushed the pair below 1.0900 and it spent some of its time moving towards the 1.0850 region as the traders were in a wait and watch mode to see what Trump had to say.

Euro Consolidates Ahead of ECB

During the US session, Trump did unveil the plan and though he did announce some major tax cuts, it did appear as though most of it was already priced into the markets as the dollar could not make much headway after the plan was announced. To the contrary, the dollar weakened slightly across the board as the cuts were already priced in and also due to the fact that the market probably expected more details and more cuts than what it ultimately did get.

In other words, the market expected more ‘plan’ in the new tax plan but the announcement was more of feeding the media headlines rather than too much details. But on the face of it, the tax plan and cuts do look good and it remains to be seen how soon Trump and his team can get it through to approval and we have to see whether it would face roadblocks similar to what we had seen to his new healthcare plan. The dollar weakness following the announcement pushed the EURUSD pair back above 1.0900 where it sits as of this writing.

Later in the day today, we have the ECB rate announcement (where the rates are expected to be on hold) and we have the ECB press conference as well. The market would look to see whether Draghi would talk down the Euro, considering the way it has skyrocketed after the French elections. The economic indicators have been good so far and not much change in policy is expected but ideally Draghi would like to keep the euro weak but it would be difficult considering that the economic indicators are looking up and it would be difficult to hide them.