EUR/USD Daily Fundamental Forecast – November 2, 2017

The EURUSD pair spent most of the day yesterday waiting in anticipation for the FOMC minutes that was to be released later in the US session. Not only this pair but many other currency pairs seemed to be looking forward to know what the Fed members thought about the upcoming rate hikes and felt that this would help them to determine the short term trend for the dollar.

EURUSD Stays Within Range

This made sure that the euro was locked in a very tight 30 pip range and those in the markets for long would know that any kind of such choppy action would be useless to trade as it was more of positioning of trades ahead of the large news events in anticipation of major moves once the news come in. What made it even more interesting is that this piece of news would be followed later on in the week by other equally important news as far as the dollar was concerned and this opened up the possibility that the entire move following the FOMC could be reversed by the upcoming news events.

In any case, the FOMC minutes did come through but most of the text, especially the ones that talked about the prospects for the future, remained the same and was much less than what the market was expecting. This led to a brief blip lower for the dollar which was met with some buying which once again led the dollar into a tight range for the rest of the time after the minutes. In other words, after all the expectation that was building through the day, the minutes turned out to be a damp squib which added to the choppy data in the form of the ADP which came in earlier in the day. Reports that Powell is confirmed as the next Fed Chair weakened the dollar late in the day but we expect the effect of this news to be short lived.

Looking ahead to the rest of the day today, the focus shifts to the pound for the day with no news from the Eurozone or the US for the day. So, we can safely expect some more tight ranging and consolidation in the EURUSD pair during the course of the day as we look ahead to the employment data from the US tomorrow which should more or less confirm the rate hike in December.