The EURUSD pair continued to trade in a very strong manner, as we had mentioned in our forecast yesterday. The bottom of the current range can be clearly seen at around the 1.0710 region and this was proved yesterday as well as during the first half of the day, we saw the euro weaken against the dollar and reach as far as the 1.0710 only to bounce back later in the day and it now trades well above 1.0750 as of this writing. We had also mentioned yesterday that the path towards 1.0800 remains clear and it is the price action there that will determine how the pair will move in the next few days.
EURUSD Rises on Nowotny Speech
The EURUSD pair weakened during the early half of the day more as a correction of the dollar weakness that we had seen the day before. The Fed had disappointed the markets and though some of the banks and the large traders believe that, overall, the Fed was indeed bullish as it made clear that there would be 2 more hikes this year, the market was not in a mood to listen and we have been seeing the dollar correcting since the announcement. Yesterday, during the first half, we saw the dollar recovering some of its losses as the pair made its way towards 1.0700.
But later in the day, we had the ECB member Nowotny saying that the ECB is likely to hike the deposit rates before the refinancing rate and this gave the EURUSD pair a big boost later in the day. From the low 1.0700s, we saw the pair rise through 1.0750 and it continues to trade near its range highs as we write this.
Looking ahead to today, we do not have any major news from the Eurozone but we have the consumer sentiment data from the US which is unlikely to bring in any major volatility. We expect the EURUSD pair to continue to trade strongly for the rest of the day and it could be challenging 1.0800 pretty soon.