EUR/USD Daily Fundamental Forecast – September 20, 2017

It is the beginning of what promises to be an interesting day of trading today for all the pairs concerning the dollar. The eyes of the market are completely and clearly focussed on the dollar and the FOMC later in the day today. Whatever has happened in the week so far, and we have to agree that nothing much has happened, will all matter to nothing if the Fed chooses to go in a specific direction. That is the reason for the consolidation that we have been having in the EURUSD pair ever since we began this week.

EURUSD Awaits the FOMC

The FOMC meeting, the announcements and the dot plot are all scheduled to be released during the middle of the US session. The market would be watching to see how the Fed deals with the balance sheet situation. The market will also be seeing what the Fed thinks about the further rate hikes this year and the next as well. The incoming data has been choppy and that has reduced the possibility of the Fed promising another rate hike this year.

Also, the inflation for this year has also not been able to achieve the targets that the Fed set out to and this is again likely to weigh on the decision of the Fed. But a large part of the market still believes that a rate hike is possible in December and would expect the Fed to keep that door firmly open when they make the announcement today. This would be the key part that the market would be interested in and a hawkish Fed, on this aspect, is likely to push the dollar higher and help to keep the recovery in the dollar going.

Looking ahead to the rest of the day, we do not have any other major economic news from the Eurozone or the US ensuring that the attention remains on the FOMC. So far, the euro continues to show signs of bullishness but everything could reverse once the announcement is out.