EUR/USD Daily Fundamental Forecast – August 23, 2017

The EURUSD pair continues to consolidate and range but yesterday, we saw the pair retrace almost the entire gains that it had made on the previous day. On Monday, we saw the pair break through the 1.18 region on the back of some dollar weakness across the board but yesterday, the pair fell back through 1.18 and retraced almost the entire move and it now sits just above the 1.1750 region as of this writing.

EURUSD Under Pressure

We believe that a correction back to the 1.17 region atleast is due in the short term as the market awaits the speech from Draghi at Jackson Hole on Friday. The market is clearly in a wait and watch mode till that time and we are also in a period of the month when the economic data and news is pretty much low all around this world. Combine this with the holiday period is certain parts of the world and we have the recipe for a boring, slow and low market that seems to be in consolidation almost always.

This is the kind of price action that we have been seeing over the last few days with the lack of fundamental drivers in the market and we believe that this kind of ranging would continue to happen atleast until the market listens to what Draghi has to say. It is difficult to judge what the reaction of the market would be as a part of the market expects him to be hawkish while another part does not expect any major change in the policy.

Looking ahead to the rest of the day, we do not have any major data from the US or the Eurozone for today which means that today could also be a day of consolidation and ranging though we favor the downside for the short term as the dollar looks to recover and the global recovery in the stock markets should help the risk sentiment and hence the dollar as well.