EUR/USD Daily Fundamental Forecast – August 2, 2017

The EURUSD pair has witnessed some choppy trading during the course of the last 24 hours as the market awaits the slew of data later on in the week. The pair is near a very strong resistance and having achieved the main target of 1.18, the traders are adopting a wait and watch approach before deciding on the next course of action.

EURUSD Still Looking Strong

We had mentioned a couple of weeks back that with the break through the 1.6 region, the next short term target would be 1.18 and that target has now been achieved. The dollar continues to trade in a very weak manner and it had a very bad month of July when the data from the US was quite bad, there were administrative bungles which led to the dropping of the healthcare reform bill and the appointment and dropping of White House officials and there did not seem to be any end to this. On the other hand, the Fed continued to keep silent and did not attempt to do anything to support the dollar, which was a big surprise and it probably pointed to the fact that keeping the dollar weak had become a policy of the Trump government.

The euro continues to remain strong with the PMI data from Germany and from the eurozone continuing to remain strong and this brings the idea of tapering closer and closer. Though the euro is clearly overbought and the dollar is probably at its most oversold levels for the past few years, the situation is quite different from what it has been over the last few years when the QE was pretty much on and the ECB was dumping funds into the market. It is this changed scenario that has been driving the euro and it is believed that it will continue to be driven even higher.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone but we have the ADP employment report, which is a precursor for the NFP, coming out later in the day and the dollar bulls would hope for a strong report to help in a turnaround.