EUR/USD Daily Fundamental Forecast – May 19, 2017

The dollar got some relief yesterday as the political troubles of Trump and his team decided to take a breather and this gave some much needed breathing space for the dollar which helped it to recover across the board. The EURUSD pair continued to stay strong but the strengthening of the dollar brought in some much needed correction in the pair.

Euro Undergoes a Much Needed Correction

The dollar had suffered over the last couple of days on reports that Trump had interfered with an investigation regarding the role of Russians and that had brought in some serious questions about his credibility and his Presidency as well. This had led to a dollar sell off amidst the political turmoil and it led to doubts whether these events could begin to affect the economy as well. The markets crashed, the dollar crashed and the shares fell as well.

But the situation was saved a bit yesterday as the former FBI Director Comey came out and said that Trump did not interfere in any investigation. This provided some huge relief for Trump and this sparked a dollar rally which was the EURUSD fall by about 100 pips from the 1.1180 region towards the 1.1080 region. This was a much needed correction for the pair as it had been rising non-stop for the past couple of days. It has since recovered and now sits just above 1.11 as of this writing.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone and the US for the day and so we can expect some consolidation in the EURUSD pair on either side of 1.11. Though the market has seen a correction, we do not believe that this is a change of trend as the rate hike by the Fed in June is still very doubtful and the market would continue to unravel the pricing in of the same. Today, we could see some ranging as the market digests all the news of the week and we could see some profit taking as well.