As we had mentioned in our forecast yesterday, with not much of euro specific news around, the EURUSD pair spent most of the day consolidating and ranging ahead of the important economic data that is to be released from the US later today. The pair did try to move up for a brief while yesterday but once again, as in the previous day, it was promptly beaten back by some strong selling and it ended the day almost at the same price that it began, a typical move on a day before an important economic news.
EURUSD Consolidates Ahead of NFP
There has been an increasing talk in the markets that the dollar is very much oversold and that the euro has been overbought but the fact that there has not been a very deep correction in this pair tells us that there is still some gas left in the tank as far as this trend is concerned. This may surprise many as the uptrend has been very strong and relentless over the last few weeks and hence there is all likelihood that many are sitting on fat profits and are hence likely to exit quickly on first signs of trouble.
It has also been quite a while since we had some good news from the US on the economic front and so the law of averages would say that the good news might come out pretty soon but we believe that the way the fundamentals are working out and the dynamics have changed, it looks as though the euro is still going up. The tapering has still not yet begun and so the ECB has its power dry while the dollar has already hiked a few times and it looks as though it may not be in a position to hike again this year.
Considering all this, we believe that the trend is likely to continue in the short term and the employment report from the US later today assumes a lot of significance due to this. If the data comes out weak, then we are likely to see the EURUSD pair shoot up higher with 1.20 as the first target and then 1.25 as the medium term target. If the data comes out stronger, then 1.17 would become key and a break below would signify a change of trend.
This article was originally posted on FX Empire
More From FXEMPIRE:
-
E-mini Dow Jones Industrial Average (YM) Futures Analysis – August 4, 2017 Forecast
-
Dow Jones 30 and NASDAQ 100 Price Forecast August 4, 2017, Technical Analysis
-
Stocks Finished Mixed after Russia Investigation News Rattles Investors
-
E-mini Dow Jones Industrial Average (YM) Futures Analysis – August 3, 2017 Forecast
-
Equities and Forex Producing Caution Ahead of Important Reports