EUR/USD Fundamental Analysis – week of November 13, 2017

Overall, it was tight week of trading and at one stage in the week, it looked as though the range for the week would turn out to be lesser than the range for the previous week which has been only around 60 pips despite the release of economic data. But, surprisingly, Friday brought in some volatility into the markets and it was a surprise as it was a bank holiday in the US on that day.

EURUSD Rises on Dollar Weakness

The pair had been caught in a very tight range till then due to the lack of any economic data or news or events that would push the pair in either direction. The only event that had the attention of the markets was the tax reform bill and its implementation with many reports and counter-reports giving out news on how it was going to be implemented. It was an important bill for Trump and his team especially after the failure to pass the healthcare reform bill.

As it turned out, the bill was implemented with the corporate tax cut plan delayed by a year. This was a huge disappointment to the corporates who were looking to save on taxes this year and this was a setback for the dollar as well and the market began to roll back all the buying that it had done following the passing of the bill. This helped the EURUSD pair to climb through 1.16 and move as high as 1.1680 and close the week near the highs of its range.

In the coming week , we can expect to have a bit more volatility as we have a couple of speeches by Draghi and a speech by Yellen where the market would be looking for signs and hints from them about the QE tapering from the ECB and the rate hike from the Fed. We also have the PPI data and the retail sales data that would be released from the US and the traders would be looking for some strong data from the US to confirm the rate hike in December from the Fed. We believe that this move up in the EURUSD is only a correction of the fall from the previous weeks and this bounce should not last long and we would be moving back into the downtrend pretty soon.