The EURUSD pair has reduced itself into a coil, probably due to the fact that we are going to have the FOMC minutes later in the day. It has been an
The EURUSD pair has reduced itself into a coil, probably due to the fact that we are going to have the FOMC minutes later in the day. It has been an eventful week so far for the pair due to the developments in Germany and though the political situation there has not been sorted out as yet, the market has fully digested the news and it looks ahead to the next important economic event.
The EURUSD has been choppy since the beginning of the week as the failure of the coalition talks in Germany has been weighing on the currency markets during this period. What we have been seeing is the fall of the eur, followed by a recovery and then the euro has fallen again and it continues to trade in a narrow range near the lows. Over the last 24 hours, the pair seems to have reduced itself into a coil and this is generally a sign of a relatively large move that is coming in the short term.
The market seems to have priced in the German political crisis for now as Merkel continues her search for finding new coalition partners. The market is now beginning to focus on the next major economic event for this week which is the FOMC minutes The traders would be looking for hints for further confirmation of the rate hike in December but we believe that, irrespective of what is being said in the minutes, the Fed would indeed go ahead and hike the rates in December. This is likely to help in strengthening the dollar in the short term.
Looking ahead to the rest of the day, we have the core durable goods data being released before the FOMC minutes and this is generally a piece of data that has been strong for the US. So, not much is likely to be read into it as the market continues to focus on the FOMC and the German crisis.
Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.