EUR/USD Daily Fundamental Forecast – August 30, 2017

The EURUSD pair had a lot of volatility during the course of the day yesterday but ended the day mostly unchanged. We had expected this kind of volatile action as this was the first chance for the London markets to react to the speeches from Draghi and Yellen that was completed last Friday. They completed their speeches pretty late in the day when the UK markets had already closed and on Monday, the UK markets were closed on account of holiday.

EURUSD Likely to be Choppy

So,we did expect some volatile action and thats what we got yesterday, powered by some month end currency flows as well. This pushed the pair higher beyond 1.20 and the pair moved as high as 1.2070 before the US session kicked it. A part of the move was also due to the increase in global risk that involves the US directly as North Korea continues to threaten them through various missile tests. But this situation was handled in a much better manner and this helped the dollar to gain in strength later in the day.

This helped the pair to correct which pushed the EURUSD pair through the 1.20 region and it ended the day where it had started. As  the pair moves higher in a quick manner, traders seem to be getting jittery on how long such a trend could last. They are also wary of how long the ECB would be able to tolerate the strong euro before they begin their intervention through some jawboning. All this seems to be weighing on the euro and we are likely to see some choppy action in the short term.

Looking ahead to the rest of the day, we have the Preliminary GDP data and the ADP data from the US which would be watched closely for the impact of the rate hikes and also whether they are strong enough to force the Fed to go in for a quick rate hike by the end of the year. So, expect some more volatility and with the holiday period also getting over, we should see some strong action in EURUSD in the short term.