EUR/USD Daily Fundamental Forecast – September 25, 2017

It was another day of consolidative and range trading in the EURUSD pair on Friday as the pair tried to break through the 1.2000 region but was promptly beaten back by some solid selling in the pair which has since pushed back the euro to below 1.20. This was something that was expected on Friday considering the fact that the German elections were scheduled to be held over the weekend and no one would want to carry large positions over the weekend in such a case.

EURUSD Likely to be Under Pressure

The elections did go through and most of the results are out already and as expected, the party of Merkel has won a majority of the vote. But what has thrown the spanner in the works is that the majority is not enough for Merkel to form a government on her own and hence the process of forming a coalition has begun. This could drag on for several days and weeks and the market is unlikely to view this with a lot of happiness. Markets seldom like uncertainty and the fact that this situation is getting dragged on could possibly lead to a sell off in the euro.

We did see some sell off in the euro in the morning trading today but so far, we have have a retrace but the EURUSD pair does look weak as of this writing and this could continue through the course of the day. We await the London session so that more news about the elections flow into the market and the market is allowed to make a decision on which way it wants to go. So far, the uncertainty and the indecision is hurting the euro.

Looking ahead to the rest of the day, we have the ECB President speaking later in the day and this event, coupled with the German election results could dominate the moves of the Euro for today. We believe that the EURUSD pair should be under pressure during the course of the day.