EUR/USD Daily Fundamental Forecast – January 11, 2017

Its been a difficult period of 24 hours for short term traders and investors alike as there has been no clear direction in the markets ever since the beginning of the week. The dollar strength seems to be waxing and waning with no fundamental or technical backing to the moves. The fundamentals, that the Fed is likely to hike rates 2 or 3 times this year and the continuing good economic data from the US, all point to growing strength for the dollar but that is not being reflected in the markets as yet. The technicals point to consolidation and ranging and that is what we have been seeing so far.

The buyers and sellers in the EURUSD are yet to commit themselves to any specific side as they are a bit apprehensive of the new Trump administration that is about to take charge pretty soon. Trump had won the election on a campaign platform of building walls and building trade within the US and launching of trader wars against neighbours and large economies and the markets are not sure how much of these will actually translate into action. Some of these moves are likely to affect the way trade is done globally and so with his administration taking charge, there is a bit of a risk off mode in the markets as they do not know what to expect.


Some of that might become clear today when Trump addresses a press conference for the first time since last July. He is expected to touch upon a variety of topics surrounding his campaign and it is hoped that he will be able to spell out atleast a few of the things that the market expects from him. It remains to be seen whether he will continue to be brash and abusive like during his campaign days or whether he would choose to be more diplomatic and mellowed down in his approach towards the Presidency and trade relations. The markets would like the latter to happen and if it does, it would be a boost to the USD. If not, it could further increase the risks in the market and we could see safe assets go up while others like the USD take a tumble.

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