Yahoo Finance EUR/USD Fundamental Analysis – week of September 25, 2017
It has been another week of consolidation for the euro, marking the fourth week in succession that the EURUSD pair has been caught within almost the same range. During this entire period, the pair has passed through NFP, retail sales data etc from the US and also the tapering talk from the ECB as well and through all this, the pair has done nothing but consolidate.
EURUSD Continues Consolidation
Even in the past week, the pair had to deal with the FOMC which was the most important event of the week and something that the market was looking forward to all week. The question was how much of the expectation that a December rate hike would happen was valid and whether the Fed would be able to go ahead with that despite the fact that the incoming data over the last few weeks continuing to be choppy and showing no specific signs of any drastic improvement in the economy. When the announcement did come in, it brought in a lot of cheer for the dollar bulls.
Though the announcement itself was a bit sketchy, the dot plot showed that the Fed members were looking towards keeping the door open for a rate hike in December. Of course this would mean that the incoming data over the next couple of months would be crucial but atleast, the market now knows that the hike is still on the table. This was enough for the dollar bulls to begin a bout of selling which pushed the euro back to the lows of the range. But this lasted only for a few hours as the euro stuck to its guns and bounced from the lows and finished the week in the middle of the range, looking a bit confused.
The upcoming week is the last of the month and hence we are likely to see a lot of month end flows which is likely to keep the markets busy. The tapering talk from the ECB continues to dominate the euro on the one hand while on the other, the German elections on Sunday is likely to keep the traders on tenterhooks. Though Merkel is widely expected to win, nothing is for sure these days and hence could see a lot of volatility in the early part of the week following the results. Unless there is a breakout in the EURUSD pair in either direction, expect some more consolidation.
This article was originally posted on FX Empire
