EUR/USD Daily Fundamental Forecast – September 4, 2017

The EURUSD pair seems to be turning a corner as the pair corrected lower during the course of the day on Friday and continues to trade in a weak manner today morning as well. This weakness is expected to continue for today as well and the fact that it closed the week near the lows of its range should speak a lot about the direction that the pair is headed for in the short term.

EURUSD Corrects Lower

The pair did seem strong during the early part of the day on Friday but it was clear that all the focus would be on the NFP and wages report that would be released later in the day. The data did come in and as expected, the data turned out to be weaker than expected. To an extent, the weak NFP and wages data was something that was being expected by a section of the market as the month of August generally tends to throw up weak data due to the way that the NFP data is calculated. So, the reaction was pretty much muted considering the bad data.

But what came afterwards was a surprise to the markets. Almost immediately after the bad data came in, there were reports that the ECB would be looking into the tapering of the QE only in December and not anytime soon. This was a disappointment for the euro bulls which led to a round of euro selling and this led to a total reversal of the upmove and led to the EURUSD pair finishing the week at the bottom of its range.

Looking ahead to the rest of the day, the additional tests from North Korea has brought in tension and uncertainty into the markets and this is likely to keep the EURUSD pair under pressure. It is a holiday in the US and hence we can expect the liquidity and volatility to be low for the day and we should see some consolidation and ranging in the pair.