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EUR/USD Daily Fundamental Forecast – November 20, 2017

By:
Colin First
Published: Nov 20, 2017, 02:58 UTC

The EURUSD pair has been rocked by the news of the coalition talks failing in Germany. It had been progressing smoothly till last week or atleast the

EURUSD Monday

The EURUSD pair has been rocked by the news of the coalition talks failing in Germany. It had been progressing smoothly till last week or atleast the market was not aware of any adverse developments and hence, this might have come as a shocker to the markets as the news broke in early on Monday morning. This has led the euro lower after it had appeared to be very strong during the course of trading last week.

EURUSD Under Pressure as German Talks Collapse

The news of the morning so far has been reports that one of the parties with which Merkel was negotiating in order to form a coalition, the FPD, has decided to pull out of the talks as it believes that forming a 4 way coalition is not possible at this point of time. This put the entire government formation in jeopardy and we are likely to see Merkel go all out in negotiating with other parties in order to hammer out a deal. New elections are also a possibility but this will only prolong the confusion and uncertainty.

EURUSD Hourly
EURUSD Hourly

Germany has been the bedrock of the entire Eurozone and it has always been known to have a stable government and economy with Merkel being the clear leader. But with her position in jeopardy and with the Brexit talks still going on, the situation appears to be heading for a mess that they could have avoided. When the election results came out, it was viewed as a disappointment for Merkel as she failed to win absolute majority and this development only worsens the situation.

This has led to a euro sell off, as expected, and the pair is now down to the 1.1730 region as of this writing. We are likely to see more selling as the story develops and we enter into the London session. There are a couple of speeches from Draghi that is scheduled for the day but it is doubtful whether he would touch upon monetary policy and even he would be surprised by the developments in Germany for which he would have not have been prepared for.Expect the lows of the range in the 1.16 region to come under pressure during the course of the day.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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