EUR/USD Daily Fundamental Forecast – November 24, 2016

The EURUSD pair plunged again yesterday after a couple of days of brief, albeit shallow, recovery on the back of sustained USD strength which was helped further by good economic data out of the US region. The pair was quiet during the first half of the day through the Asian and the Euro session but the volatility began soon after the NY session began. The pair was testing 1.0600 before the release of the Durable Goods data and when that data came in at a much better than expected value of 1%, it was enough signal for the market to start buying the USD again and that made the pair crash through 1.0600 and reach as far as 1.0525 before the pair stabilised somewhat to close the day just below 1.0550.

We had mentioned that the region between 1.0500 and 1.0600 is a region of strong support for this pair and earlier in the year, we had some large banks and funds predict this region as where the Euro would end up for the year. So, we are there now and it remains to be seen on what happens here. The price action at this point of time, points to continued weakness and with the holidays in the US over the next 2 days for Thanksgiving, there isnt much in the horizon that could boost the euro against the dollar. The signs are not good for the euro and so it remains to be seen where it is going to get help, if any.

Below 1.0500, there isnt much by way of support and we could then be looking at a slow drift towards 1.0440 and then on to 1.0380 but if this drift downwards continues for the medium term, we could really be looking at parity. Looking ahead to today, we have the German Ifo Business Climate which generally brings in a small bout of volatility around it but nothing that can turn things around at this point. We will continue to watch the price action closely and see what happens on a test of 1.0500 before we can conclude on whether this move is going to continue further or not.