EUR/USD Daily Fundamental Forecast – January 20, 2017

EURUSD had an up and down day yesterday as it crashed below 1.0600 for a brief while but then clawed all the way back up towards the end of the day and continues to trade near the highs of its range as of this writing. The euro has shown some remarkable resilience since the start of the year and though the dollar has tried to best to make a comeback against the euro, it has always found the going tough over the past few weeks and the euro has always bounced back and it continues to look strong.

Yesterday, we had the ECB rate statement and the press conference that was addressed by the ECB President Draghi who made it clear that the ECB had no intention of reducing the QE in the near future. He also stressed that the recent inflation was due to the increase in energy prices and so did not require any major action from the ECB at this point of time. This seemed to cause some jitters in the market and it pushed the EURUSD pair down below 1.0600 for a brief while. But, as has been the case recently, the euro clawed all its way back towards 1.0660 and it reversed the entire downward move during the course of the NY session though there was no specific reason for the weakness in the dollar. The only short term risk for the dollar was the fact that the Trump administration would be assuming charge today but that is something that was known quite early. In any case, the dollar continues to trade slightly weakly across the board today morning and we believe that we are in for a period of consolidation today.

Looking ahead to today, we do not have any major news from the eurozone or the US region and as said above, we can expect some more consolidation at the highs in this pair for today.