EURUSD Daily Fundamental Forecast – September 15, 2017

EURUSD Friday

The EURUSD pair recovered from intraday losses ahead of the European open, with the Dollar struggling to hold on to Thursday’s gains. Market sentiment towards the Eurozone economy remains upbeat in spite of the EUR’s steady decline through the week, with the moves in the pair coming off the back of a shift in outlook on monetary policy, with divergence having favoured the EUR ahead of the FED’s blackout period. Thursday’s inflation figures out of the U.S has provided the Dollar with some much needed support. Improving prospects of a December rate hike by the FED will likely see the markets continue to rebalance, though we’re unlikely to be hearing any talk of parity anytime soon, with the ECB also expected to begin tapering the asset purchasing program and we are likely to see the EUR continue to find strength until the FED says otherwise.

EURUSD on the Rise Ahead of U.S Data

Stats out of the Eurozone have been on the lighter side through the week, which has likely contributed to the EUR’s weakness, while data out of the U.S and a shift in market risk sentiment, before this morning’s North Korea missile test, saw the Dollar recover some of its vim ahead of today’s data.

The ECB has continued to talk of the need of accommodative monetary policy, with tepid wage growth and a lack of inflationary pressure expected to persist over the near-term. This morning’s 2^nd quarter Eurozone wage figures will provide the markets with some idea on whether there has been any pickup in wage growth, though any positive numbers are unlikely to shift the ECB’s monetary policy outlook anytime soon. With July trade data also scheduled for release, the EURUSD could see more red ahead of today’s U.S stats, with the Eurozone’s trade surplus forecasted to narrow, as the EUR continues to strengthen against its peers.

Today’s U.S data will likely dictate the direction of the pair going into next week’s FOMC meeting, with a number of stats scheduled for release this afternoon, including August retail sales figures, which will need to be upbeat for the markets to maintain its positive outlook towards the U.S economy.

Other stats include September’s New York Empire State Manufacturing PMI, prelim Michigan Consumer Expectations and Sentiment Figures, July’s business inventories and August industrial production figures.

For the Dollar to close out the day in positive territory, the numbers will need to be positive, though it’s likely to boil down to the retail sales figures as far as monetary policy outlook is concerned.

While the stats will be the primary focus through the day, the markets will need to keep an eye on how the U.S and other world leaders respond to the latest North Korean missile test, any increased tension through the day likely to weigh on the Dollar and then there is the U.S administration and the talk of tax reforms to consider, Dollar weakness through the year largely attributed to disappointment over the administration’s lack of delivery on growth policies.