EUR/USD Daily Fundamental Forecast – July 31, 2017

The euro looks set to climb even further over the coming days unless there is a specific fundamental or news driver that is going to push the EURUSD pair to correct itself. It has to be agreed that the move up has become slower over the last week or so and last week, we saw a large correction of around 150 pips in the pair which shows that the bulls may be beginning to get a bit tired.

EURUSD Still in Uptrend

But on the other hand, the dollar does not seem to have any support from anywhere and by the looks of it, seems as though the Fed has not supported the dollar  on purpose. We remember Trump saying, in the beginning of the year, that he would like to see the dollar weak and thats why it makes us believe that the dollar has been left to weaken as a policy decision rather than anything else. The incoming data for the dollar has been weak and the administrative happenings in the US continue to keep the pressure on the dollar.

We have seen the Chief of Staff being fired late Friday and it seems to be only a matter of time before other White House officials follow him out. This kind of risk and uncertainty in the White House is bound to keep the dollar under pressure despite the fact that we saw some improving data over the last week. Though the ECB may not be entirely happy with the stronger euro, they do not seem to have much of a choice at this point of time with the dollar weak and also the euro being supported by strong economic data.

Looking ahead to the day, we have the CPI flash estimate data but being the last day of the month, we expect trade positioning and month end currency flows to dominate the moves in the market for today as the traders await much more important news in the second half of the week. This should lead to a small period of consolidation in the EURUSD pair.