The EURUSD pair continued to weaken through the course of the day yesterday and there does not seem to be any respite to this move down. From what appeared to be a correction in the pair and a rebound in the dollar, we are now at a stage where we believe that we are looking at a change in trend and the dollar now slowly beginning to show its strength and beginning an uptrend of its own.
EURUSD On The Backfoot
The pair has briefly traded in the sub 1.17 region as we write this and it looks only a matter of time before there is further weakening. The bounces have been few and far between and even these bounces have been quite shallow. This points to how strong the dollar uptrend has been so far and we are probably looking at a full reversal as far as the uptrend in this pair is concerned. Yesterday, the only news of note from the US was the ISM Manufacturing data which came in much stronger than what was expected.
This augurs well for the dollar as the dollar bulls believe that the data from the US would keep getting better this month and this would then force the hand of the Fed to hike rates in December. This is the direction that the dollar bulls ideally want to take and the market believes this as well and thats why we have been seeing the dollar strengthen across the board over the past couple of weeks and this has led to a correction in this pair.
Looking ahead to the rest of the day, we do not have any major economic news from either the Eurozone or the US for the day today but we believe that the EURUSD would continue to be under pressure for today. The burst of data from the US would begin tomorrow and till then the dollar bulls are likely to rule the market.
This article was originally posted on FX Empire