The EURUSD pair moved lower over the last 24 hours as the dollar began to gain in strength all across the board. There was no specific fundamental reason for the dollar to gain in strength. But if you believe that avoiding a funding related shutdown through a vote in the Senate, something which they seem to do every 6 months, then that is a reason for the dollar moving higher.
EURUSD In Tight Range
The euro did initially try to rally on the back of reports of some progress in the Brexit talks but as the US session opened, the dollar strength began to spread across the markets and the euro has also fallen victim to it. The euro has pushed through to the 1.1760 region where it has found some decent support and we may consolidate in this region as the market awaits bigger news in the short term. The traders have basically reversed almost the entire upmove from a couple of weeks back and as we had mentioned in our forecast at that point, the dollar seems to be on the path to ending the year on a strong note.
In this, the dollar is likely to be helped by the FOMC rate announcement in the coming days where the Fed is expected to hike rates. Though this is something that is fully priced into the markets at this point of time, we may get a short term boost for the dollar once the announcement comes in. The market is also likely to settle into a period of tight consolidation and ranging over the next couple of weeks as we head into the end of the year and a holiday period.
Looking ahead to the rest of the day, we have the NFP employment data from the US which will be watched closely as usual. This time, it will be watched so that the market can see when the Fed is likely to time its rate hikes in 2018 as it has made it clear that the further rate hikes would be dependent on the incoming data.
This article was originally posted on FX Empire