EUR/USD Daily Fundamental Forecast – October 23, 2017

The EURUSD pair ended down for the day on Friday and the weakness continues today as well as the strength in the dollar shone through while the Eurozone continues to deal with the situation in Spain which has added pressure on the euro for the short term. The market is likely to move sideways over the next few days as it awaits the ECB later in the week which should then determine the short term direction for the euro.

EURUSD Continues to Remain Unclear

The crisis in Catalonia continues as the Spain government has dismissed the government in Catalonia and called for fresh elections in a bid to scuttle the call for Independence from there. This confusion and uncertainty is likely to weigh on the euro for today and tomorrow as well as the traders continue to track the situation closely to see how much it is likely to affect Spain and the rest of the Eurozone as well. We do not expect too much of an action in the first half of the week as the market awaits the ECB as well.

The ECB is expected to discuss about the tapering of the QE in their meeting and hence the statement and the press conference from Draghi is expected to lead to a lot of volatility in the euro later in the week. The ECB has not yet given any firm timeframe for the tapering and the market would hope to hear more about it this week. The dollar continues to hold steady though the fact that the incoming data from the US has been choppy, has led to the waters being muddled as far as the dollar is concerned. This is also expected to resolve itself over the next couple of weeks which should then give rise to a strong trend.

Looking ahead to the rest of the day, we do not have any major economic news from the US or the Eurozone for the rest of the day and so the tensions in the Korean region and the uncertainty in Catalonia are expected to dominate the market moves for today.