EUR/USD Fundamental Analysis – week of October 9, 2017

The EURUSD pair had a mixed week as it fell hard during most of the week but it did show some strength towards the end of the week on the back of some weak dollar data and this should give some hope for the bulls in the week ahead. The pair has been struggling to hold on to its support in the face of some dollar onslaught and it should be a relief for the bulls that they have passed through the NFP data test much unscathed.

EURUSD Trades in a Choppy Manner

The first half of the week was pretty quiet as there was not much data around and it was pretty clear that the market was await all the data that was scheduled to be released later in the week. Things began to heat up towards the middle of the weak as the ADP data came in as per expectations while the PMI data from the US came in much stronger than expected. The data from the US continued to be strong the next day as well but the focus was clearly on the NFP as the market moves were also choppy.

The NFP and wages data came in and they were one either sides of the line as the NFP came in much weaker while the wages came in stronger. This led to a brief period of dollar strength but this got reversed quickly as the market realised that the wages data could have been strong due to the hurricanes and not due to the economy improving. This reversed all the dollar gains and helped the EURUSD to close in a pretty decent manner for the week above 1.17.

Looking ahead to the coming week, we have the FOMC meeting minutes which will be watched closely for further signs of when the Fed would be hiking the rates and also to see whether the December rate hike is still on the table. We will also have the CPI and retail sales data from the US which is also likely to bring in a lot of volatility. We expect the EURUSD pair to bounce a bit from here but the overall direction seems to be down for the medium term and hence we expect the pair to move down.