The EURUSD pair had a volatile day on Friday as the first half of the day saw the pair continuing to move higher and threatening to break through the highs of the range but this led to a correction later in the day which forced the pair to end the week on a weak note. This should give a lot of heart to the bears in this pair and lead to a belief that there would be further correction in the coming week.
Euro on the Backfoot
The euro began the day on a strong note and it looked as though it was only going to be a matter of time before it broke through the range highs and set a three year high. But on the other hand, it continued to rankle that the dollar was so weak despite the fact that there was nothing fundamentally wrong with the US economy. It is true that the data from last week, with weak retail sales and strong inflation data, was a bit choppy but that did not indicate anything that was inherently wrong with the dollar.
So the fact that the dollar began to weaken so much just due to some choppy incoming data did not sit well with the dollar bulls and they made their intentions known during the second half of the day as they bought dollar and this led the pair below through the 1.25 region and towards the 1.24 region and thats where it ended the week. Today morning, we are seeing a slightly recovery of sorts but the euro continues to trade in a weak manner and the fact that it has been unable to break through the range highs despite few attempts shows us that it is going to become even more difficult for the euro bulls in the short term.
Looking ahead to the rest of the day, it is a holiday in China and the US as well and hence we can safely expect the volatility to be pretty low for the day. We should see some consolidation and ranging for today due to lack of fundamentals and economic data.
This article was originally posted on FX Empire
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