EUR/USD Daily Fundamental Forecast – May 26, 2017

The EURUSD had a tight ranging day of consolidation yesterday where the dollar strength in the rest of the markets could not affect the euro by much and it was pretty amazing to see the way the euro held up despite the other currencies falling by the wayside on the dollar strength. This is in contrast to the picture till a couple of months back when euro would be the first currency to roll over and be dead on any slight signs of dollar strength.

EURUSD In Tight Consolidation

This is indeed a victory for the euro bulls and shows the extent to which it has recovered its economic strength as shown by the incoming economic data and the confidence of the ECB leaders in addressing the monetary policy. The political leaders like Merkel have also stepped in with their jawboning that the euro is still very weak and all this has added to help the euro.

Yesterday, we saw the EURUSD pair make a move to the upside to reach as far as the 1.1250 but as we have seen a few times by now, it was met by a lot of selling in that region which has since pushed the pair back towards the 1.12 region and this consolidation and ranging is likely to continue as we move towards the end of the month. With the lack of economic news as we move into month-end, we can expect the pair to be affected by the month end currency flows which should help to keep the pair volatile in the short term.

Looking ahead to the rest of the day, we have the durable goods data and the Preliminary GDP data from the US. We have also begun to see some Fed members raise the possibility of a June rate hike which should help to support the USD and keep the EURUSD pair under pressure.