EUR/USD Daily Fundamental Forecast – May 25, 2017

The EURUSD rose over the last 24 hours as the FOMC minutes gave a mixed picture to the markets. The markets do not like confusion or uncertainty and that is the reason why they have given a thumbs down signal to the dollar so far as a result of which, the dollar is on the backfoot as of this morning. It remains to be seen whether this is going to be the theme for the rest of the day or whether the London session is going to give a different interpretation to the minutes.

EURUSD Bounces Off Support

The pair was chopping around in a consolidation mode for most of the day yesterday, below 1.12 and it looked pretty weak going into the release of the minutes, though it managed to hold on to the strong support region at 1.1180. The minutes came in a revealed a mixed picture as the Fed members gave their opinion on a variety of factors affecting the economy. The key takeway was that the June rate hike was still on the table but it also said that it would be highly dependent on the incoming data.

There was also an acknowledgement that the Q1 growth was not as much as expected and the monetary policy beyond the short term is also not very clear at this point of time. The market had expected the minutes to paint a hawkish picture of the economy but in the absence of that, the investors chose to sell the dollar longs and the EURUSD pair was able to recover back above 1.12 and now it is trading near the range highs just below 1.1250 as of this writing.

Looking ahead to the rest of the day, we do not have any major economic data from the Eurozone but we have the unemployment claims data from the US for the day. It is a bank holiday in France and Germany and so we expect the London session to be a bit subdued and the key would be to see if the EURUSD pair manages to break through the range highs in the 1.1260 region.