EUR/USD Daily Fundamental Forecast – February 28, 2017

It looks as though nothing can keep the dollar down for long. We had a weak durable goods data and then we have the situation where Trump continued on his whimsical ways by delaying the plan for tax cuts, something which he had announced a couple of weeks earlier and that which should have been ready by now, and all this did point to a weak dollar for a brief while. As a result of this move, we saw the EURUSD pair make a move towards 1.0630 overnight and the pair did look good for more.

EURUSD Weakens Overnight

But what we got later was further proof that it is going to be a very difficult job for the bears to keep the dollar down. With no apparent reason, the dollar recovered its strength and this helped to push the EURUSD pair below 1.0600 and it trades just above 1.0580 as of this writing. The reason for this bout of strength in the dollar was attributed to statements from Trump on the increase in infrastructure which was one of the favorite campaign topics of his, as far as the markets were concerned.

There were rumors that this would likely to be delayed till 2018 but the fact that he raked it up makes it look as if the increase might start in 2017 itself which should keep the markets buoyant. This helped the dollar recover to some extent but the key would continue to be the FOMC rate and rate statement in March.

With the obsession over Trump and his policy changes becoming less and less everyday and with the attention on the Fed and its rate hikes increasing, all eyes would be on the Fed in the coming days to see when they are likely to bring in their first rate hike.

Looking ahead to today, we do not have any major news from the Euro region but we have the Prelim GDP and the consumer spending data from the US and this is likely to bring in some volatility in the dollar and hence affect EURUSD. We believe that this pair would continue to consolidate with a bullish bias for the rest of the day.