EUR/USD Daily Fundamental Forecast – September 5, 2017
The EURUSD pair did not have much work to do yesterday as the holiday in the US led to low liquidity and hence some low volatility in the pair. To us, the pair continues to look weak and it is likely to get even weaker as the days roll by but for now, expect some consolidation as the market awaits some data from the US to figure out where it wants to go in the short and medium term.
EURUSD Likely to Stay Under 1.20
The dollar seemed to be on the backfoot after the NFP and the wages data came in pretty weak late on Friday and it all seemed one way traffic at that moment. But the reports that said that the ECB would move on tapering only towards the end of the year has delayed the tapering timeline and this has led to the euro being sold across the board. This sell off is likely to continue for the short term.
In the meantime, the dollar bulls would hope to see some turnaround in the data from the US. With the Fed rate hike ruled out for the rest of the year, the bulls would hope to see some positive data from the US which would help them to stall the dollar fall atleast for the time being and begin to plan some kind of a recovery. The dollar has not been able to string together a decent bounce over the last few months and the bulls would be hoping for a turnaround. With the ECB also indicating that they are not very happy with a strong euro, this might just be the right time for them to plan a turnaround.
Looking ahead to the rest of the day, we do not have any major news from the Eurozone but we have a few Fed members making speeches which should affect the dollar in the short term. The market would be looking to see what they think of the US economy and hope that they would give hints on when the next rate hike would be. We expect a small bounce in the EURUSD pair but we believe that the region around 1.20 should cap any kind of bounce in the pair.
This article was originally posted on FX Empire