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EUR/USD Daily Fundamental Forecast – February 23, 2017

By:
Colin First
Updated: Feb 23, 2017, 04:32 UTC

The EURUSD pair was generally quiet during the first half of the day, which is something that we had forecasted as well, as it awaited the FOMC meeting

EUR/USD Daily Fundamental Forecast – February 23, 2017

The EURUSD pair was generally quiet during the first half of the day, which is something that we had forecasted as well, as it awaited the FOMC meeting minutes and was looking forward to what the Fed members thought about the economy and the rate hikes during their last meeting. The bias was clearly on the downside during this early consolidation as the prices dipped below 1.05 for a brief amount of time but it then recovered during the second half of the day.

Before the FOMC came the Other News

Before the FOMC minutes came in, there was news that one of the likely candidates in the French elections decided not to contest and chose to support Macron which was  a setback to his opponent Le Pen. She is being considered as a hardliner and someone who would be against the Eurozone concept and a setback to her was enough for the markets to cheer up the euro and the EURUSD shot up by about 30-40 pips even before the FOMC minutes came.

The minutes also turned out to be a disappointment largely, as it was not as hawkish as was expected to be. The members chose to think about hiking rates fairly soon which probably rules out the hike in March. This was seen as a disappointment by the dollar bulls who had expected the minutes to be much more hawkish in predicting a March hike. As a result of this, the pair shot through 1.0550 and it trades just above that as of this writing.

EURUSD Hourly
EURUSD Hourly

There is still a bit of uncertainty regarding the timing of the next rate hike as some of the Fed members continue to say that the March hike is something that is still on the table. But markets rarely like uncertainty and so we expect the weakness in the dollar to continue for today. Looking ahead to the economic agenda, we have the unemployment claims data from the US but we do not think that it would cause much volatility in these markets.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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