EUR/USD Daily Fundamental Forecast – August 17, 2017

The EURUSD pair seems to be like teflon, strong and refusing to buckle down whatever happens as the pair managed to bounce again, this time on the back of a weak dollar. The dollar action has been choppy over the past week or so as the focus has been on the data from the US and events from there over the last week or so. So, the euro has had little say in the value of the pair while the entire action has been dominated by the dollar.

EURUSD Bounces Again

Yesterday, the housing starts from the US came in slightly weaker than expected but that did not shake up the dollar too much. The EURUSD made  brief visit below 1.17 a couple of times but still there was no sign of a break and drop. Then came reports that the members of the trade and policy council, a council that was launched with much fanfare at he beginning of the Trump administration, had been disbanded by Trump after a large number of members resigned from it. This was a setback for the economic policy of Trump and this led to the first round of selling in the dollar.

Then came the FOMC minutes which said that the balance sheet normalization would be taken up in a forthcoming meeting but did not specify any timeline for the same. The other points also were not very hawkish and this did not support any timeline for the next rate hike from the Fed and this led to the next larger round of selling in the dollar. This helped the pair to recover back above 1.17 and move higher through 1.1750 and the pair rests below 1.18 as of this writing and looking to decide which way it wants to go.

Looking ahead to the rest of the day, the focus returns back to the euro as we have the CPI data and the monetary policy meeting accounts. The bulls are back in control of the EURUSD pair and this is likely to keep the pair well bid in the short term where we might have a test of the range highs sometime soon.