EUR/USD Fundamental Analysis – week of February 12, 2018

Colin First

Updated Fri, Feb 9, 2018, 8:28 PM

It was a bearish week for the EURUSD pair as the pair corrected low and finished the week near the 1.2250 region after having begun the week above the 1.24 region. The pickup in the strength of the dollar was attributed to be the main reason for the pair to feel the pressure and we believe that now the bears are in control which could mean further losses in the coming weeks.

EURUSD Moves Lower on Dollar Strength

The dollar gained in strength across the board and though there was not much fundamental news or economic data to support the dollar during the week, the dollar continued to gain in strength mainly due to the anticipation of further rate hikes from the Fed and this anticipation has been growing on a daily basis. The scene had been set the week before when the employment reports from the US came in much stronger than expected and we had mentioned at that time that this would be enough for the Fed to consider a rate hike in March and that it would only be a matter of time before the dollar begins to gain due to this.

That gain happened this week when the economic calendar from the US was pretty much bare but whatever data that came in during the week, like the factory orders data, continued to show the US economy in good light and this pushed the pair on the backfoot for much of the week. There was not much data from the Eurozone as well but even the fall in the stock markets seemed to favor only the dollar and not the euro.

Looking ahead to the coming week, we have the next set of important data from the US in the form of the CPI, PPI and retail sales data during the course of the week. These would be watched closely for strength and if they continue to come in strong, that would confirm the rate hike in March and also increase the expectations for more than 3 rate hikes this year from the US. This would cause the pair to continue it fall with the next support coming in at the 1.2070 region which would be the next target of the bears.

This article was originally posted on FX Empire