The EURUSD pair has, as expected, been moving within a tight range over the last 24 hours. This is what we had mentioned in our forecast as well as the holiday in Japan, USA and Canada took out a lot of liquidity in the market and led to some drab trading during the course of the day. This in turn led to some consolidation in the pair.
EURUSD Consolidates
It is only during this morning that we are seeing some action in the pair as the dollar seems to be weakening all across the board. We can expect the liquidity to return back to the markets today which should ensure a lot of action in the markets for today. We also have the FOMC minutes that is scheduled to be released tomorrow and we can expect the traders to position themselves ahead of the meeting. Though the market has priced in a rate hike in December by 80%, nothing is concluded as yet.
The Fed has hinted that it keeps the door open for a rate hike in December but what could throw a spanner in the works is the fact that the incoming data from the US continues to be choppy. The NFP data failed to live up to expectations and the wages data was also construed to be a quirk of data which basically means that the data has not been helping the dollar. This is the reason why we believe that the dollar could weaken further in the short term and it would be interesting to see if the Fed would continue to maintain a hawkish tone in the upcoming minutes as well.
Looking ahead to the rest of the day, we do not have any major news from the Eurozone or the US and hence it would be safe to say that we can expect the the EURUSD pair to continue to be bullish for today. It would be interesting to see how the pair reacts at the 1.18 region as a break through could see this pair moving quickly higher.
This article was originally posted on FX Empire