EUR/USD Fundamental Analysis – week of June 19, 2017

EURUSD had a very volatile week which was expected as the FOMC rate announcement and the statement came in last week and that was enough to guarantee a lot of liquidity and violence in the markets. The euro had been one of the strongest currencies against the dollar due to the improving data from the Eurozone which was acknowledged by the ECB sometime back and also by the IMF over last week. This has increased the expectations that they would be looking to cut down the QE program in the coming months though Draghi has been denying the same over the last couple of months.

EURUSD Still in Bullish Mode

But last week, it was all about the Fed and the data from the US. Unlike the Eurozone data, the economic data from the US has seen a downtrend over the last couple of months with the employment and housing data coming in weaker than expected. It was the same case last week as well as the Retail sales, housing and CPI data all coming in weaker than expected and for a brief while, the market believed that the Fed might decide to wait a little longer to hike rates. This pushed the EURUSD pair to its weekly highs in the 1.1295 region but then came along the Fed which stuck to its plans and hiked the interest rates.

Not only that, they chose to brush off all the recent economic data and decided to focus on growth in the upcoming months. This was viewed as being very hawkish and this outlook pushed the EURUSD pair through 1.12 and down to the 1.1130 region. But, towards the end of the week, we received some weak housing data which brought in a bounce in the pair and the pair ended the week slightly below 1.12 confirming that the bulls are still in control in this pair.

Looking ahead to the coming week, apart from some PMI data, we do not have any other major news from the Eurozone or the US and so we expect the pair to continue to range with a bullish bias with the 1.13 region continuing to act as a strong ceiling.