The dollar continued to strengthen across the board over the last 24 hours and this has hit the EURUSD hard. The pair has fallen by around 100 pips and it trades around 1.0530 as of this writing and continues to look weak. We had mentioned in our forecasts yesterday that the pair is likely to trade weak as the dollar gains in strength for the short term and this is what we have been seeing as there has been no respite from the dollar strength.
EURUSD To Be Under Pressure
While the dollar strength was triggered by the Trump speech where he promised a tax plan with huge cuts for corporates and the middle class and increase in spending, the Fed members have added fuel to the fire by maintaining that a rate hike is likely in March. While the FOMC minutes last week did not hint at the timing of the rate hike, the Fed members have been quite consistent in their speeches where they have insisted that a rate hike in March would be appropriate. If this turns out to be true, then we can expect some more strength in the dollar which should push the the EURUSD pair further down.
This sets the sights of the market firmly on the Fed rate announcement and the accompany statement and the dollar bulls should be glad that the focus has finally shifted to the Fed which is what is appropriate for an economy. Looking ahead to the rest of the day, we have the unemployment claims data from the US but irrespective of how it comes out, we believe that the EURUSD pair would continue to be under pressure for the rest of the day. It is in a strong support region as we write this but once the support is broken, we would be looking for much lower prices in EURUSD.