EUR/USD Daily Fundamental Forecast – November 8, 2017

The EURUSD pair was on the backfoot for most of the day yesterday and it fell towards the 1.1550 region during the course of trading yesterday. The dollar was one of the strongest currencies around yesterday and as it managed to hold steady, the other currencies around it began to fall. The dollar has managed to hold steady over the last few weeks despite the choppiness of the incoming data as the market slowly and steadily prices in a rate hike.

EURUSD Moves Lower on Dollar Pressure

The euro, on the other hand, has been quite weak ever since the ECB announced an extension of the QE about a week back and even yesterday, the ECB President did not say anything specific about the extension in his speech. It has become a policy of many countries to keep their currencies weak deliberately as a matter of policy as it helps their economy and hence the ECB should be happy with the weakening euro, especially considering the fact that the incoming data has been strong.

On the other hand, the dollar has been gaining steadily as the market continues to believe that the Fed would hike rates in December. The data has not been very supportive but the market does not seem to mind that too much. Also, the dollar has been well supported due to the new tax reform plan that is going through the works. There are also reports that the tax reform plan might be delayed by a year and things remain uncertain in that regard.

Looking ahead to the rest of the day, we do not have any major news from the US or the Eurozone and hence we can expect some consolidation on either side of 1.16. We expect the consolidation to be bullish as the dollar strength begins to give way a bit and so the euro should be able to take advantage of that.