EUR/USD Daily Fundamental Forecast – November 21, 2017

The EURUSD pair turned choppy and whipsawed during the course of the last 24 hours but it was clear that the pair is under pressure due to the developments in Germany. The euro was hit by the news of the coalition talks in Germany breaking down and it moved lower during the Asian session. It looked as though all was over for the euro as the London session began but then it showed some renewed strength during this session.

Euro Under Lot of Pressure

The euro moved higher during this period as the market and the traders seemed to largely ignore the developments and the prices reached as far as 1.18 but during this entire move up, it was clear that there was still some underlying pressure in the euro and that it was only a matter of time before the pressure began to resurface. That began to happen as the US session approach and by the end of the day, the euro had weakened once again and ended the day below 1.1750 and continuing to look weak.

Merkel continues to struggle to deal with the situation and this has weakened her position both domestically and internationally especially at a time when the Brexit talks are going on. She continues to reach out to other parties for coalition but at the back of her mind, she would know that it is going to be a difficult task. The last option is calling for another election but that will only add to the uncertainty as no one knows whether she will emerge stronger or still more weaker post the election. This is causing a lot of turmoil in the German markets and this is affecting the euro as well.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone or from the US and hence we do expect the euro to continue to trade in a weak manner during the course of the day. We expect the euro to move below 1.17 as the uncertainty in Germany continues to dominate the markets.