EUR/USD Fundamental Analysis – week of October 2, 2017

The EURUSD pair had a choppy week at the end of which it seems ready to continue on its next leg of its bullish journey atleast in the first half of the coming week. The first part of the week was a continuation of the rebound in the dollar which pushed the EURUSD through 1.19 and through 1.18 and at the middle of the week, it looked as though the pair might move even lower.

EURUSD Bounces, Awaits Data

Then came a period of consolidation and ranging as the tide seemed to turn. It must be noted that the past week was the last of the month and hence the fundamental and economic drivers were pretty much less. So, the moves were left to the market forces which pushed around the various pairs. As for the EURUSD pair, it rose following the period of consolidation though there was nothing to drive the move fundamentally. The speeches of Yellen and Draghi added nothing new to the mix and the incoming data from the US, in the form of the GDP, was also favorable to the US but the dollar rebound did not last through to the end of the week.

So, by the end of the week, we saw the euro strengthen again and it rose from the lows of 1.17 and pushed through 1.18 where it ended to close the week. This gives a positive bias to the upcoming week, as far as the euro is concerned, and this is likely to keep the bulls interested. The coming week is scheduled to have a lot of economic news from the US and with the Fed making it clear that the rate hike in December depends on the incoming data, this would be watched very closely by the markets.

The incoming news includes the employment report which should be the key driver for the dollar in the short term. If the data comes in stronger, then we should see the EURUSD pair start its correction once again and this time, it is likely that the lows of the range be broken. We do envisage the bounce in the euro to last for atleast the first half of the week while the data in the second half of the week will be the key for the euro and the dollar moves in the short and medium term as well.