EUR/USD Daily Fundamental Forecast – January 17, 2017

EURUSD generally traded on a weaker note though the weakness was more about the euro than any kind of strength in the dollar. Yesterday, the markets of the world were dominated by fears over the Brexit process. Over the weekend, we have been hearing more and more noise that makes us believe that the Brexit process is likely to be a hard one rather than a soft one. This is likely to long and hard and prolonged negotiation between the UK government and the eurozone leaders and this will affect the economies of the countries involved.

Though a hard Brexit is likely to hit the UK hard, it is also likely to affect the entire eurozone as well as most of them do large business with the UK and so a total stoppage of the free zone between the UK and the eurozone or a restricted access to the same is likely to affect the economies of all the countries involved and that was the reason for the correction in the EURUSD pair yesterday. The pair had closed slightly below 1.0650 in the last week but yesterday, it crashed towards 1.0600 and traded below that for brief periods. We would have probably seen a much larger correction in the pair if not for the fact that yesterday was a holiday in the US and so the US markets were closed for the day.

Looking ahead to today, we do not have any major news from any part of the eurozone for today but we do have the speech from the UK PM where she is likely to spell out some more details about the Brexit process and this is likely to affect the euro as well. We suggest that our traders trade carefully with strict stop losses and it would be even better if they stayed on the sidelines till the dust settles.