EUR/USD Daily Fundamental Forecast – August 16, 2017

The EURUSD pair moved lower yesterday on the back of some dollar strength that was seen across the markets following the strong retail sales data from the US. The pair has been unable to break through the highs of the range and on the other hand, the pair has not yet broken through the lows of the range as well, leading to a period of tight consolidation with little space to move this way or that as the trend traders start getting impatient with this kind of price action.

EURUSD Moves Lower on Strong Dollar

Yesterday, the retail sales data from the US came in much stronger than expected and all aspects of the sales data, including the breakdown numbers, were better than expected and this was the boost that the dollar bulls needed and this led to a round of dollar buying in the markets. This led the EURUSD pair lower as the pair once again briefly crashed through the 1.17 region and threatened to move lower but once again, we saw a large amount of buying come in which has since pushed the pair back above 1.17 and it now trades just below 1.1750 as of this writing.

Though it has to be given that the pair has done very well so far by not moving lower despite all the strength in the dollar over the last couple of weeks or so, it remains to be seen how long the pair would be able to sustain all the selling and still hold on to the support. The incoming data from the US has been turning positive over the last few weeks with the NFP and the retail sales data coming in stronger than expected and as this continues, it would be difficult for the euro bulls to hold on for much longer.

Looking ahead to rest of the day, we have the FOMC meeting minutes later in the day where the minutes is likely to tell us how the Fed is going to go about its normalization of the balance sheet. It would also tell us what the Fed members think about the economy and this could be dollar positive if they are hawkish. If they are indeed hawkish, then we could finally see the break lower in EURUSD.

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