EUR/USD Fundamental Analysis – week of May 1, 2017

The EURUSD pair had a very strong week to finish and to further help its cause, we also saw the pair hold on to its gains and finish the week strongly as well which promises a lot for the coming week. For long, we had seen the pair in a consolidation and ranging phase and this was especially so, since the beginning of the month as the pair awaited the French elections. The traders were not ready to invest too much into the euro when they were not sure on who would win the elections and thats why we had seen so much of consolidation and ranging.

Euro Strikes a Bullish Tone

But those doubts and fears were cleared off last weekend as the French election results came in a showed that the business and euro friendly Macron had won the elections comfortably and also looked set to win the run off against Le Pen on May 7. This was great news for the euro and this helped the pair to push from its lows in the 1.0700 region through 1.0800 and this effect continued through the course of the week which helped to push it through 1.0900 and as far high as 1.0950. There was a brief weakness in the pair as the dollar gained due to the new tax cut plan from Trump.

But this new tax cut plan seemed to have already been factored into the markets and hence it did not have much of an impact on the EURUSD pair. It closed the week slightly below 1.09 but the pair seems to have finally broken clear of some of the strong resistances along its way and seems set for further progress. Draghi did try to give a dovish tone but with the economic data from the Eurozone continuing to throw up some strong numbers, there wasnt much that Draghi could do and the pair looks quite strong to end the week.

Looking ahead to the coming week, we have the NFP, FOMC and and Yellen speaking as well and this should bring in a lot of volatility in the pair in the coming week. These events would be watched very keenly to see if the Fed drops any hints of the next rate hike in June. Trump has made it clear that he prefers low interest rates and so it remains to be seen on whether the Fed would strike a bullish tone hinting at a hike in June or would fall in line with Trump’s thinking. A very volatile week ahead !