EURUSD Technical Analysis for the Week of January 30, 2017
EURUSD had a pretty volatile week but it should concern the euro bulls that all the moves in the pair were led by the dollar and not by the euro. The reason is that if it was led by the euro, then we could believe that it is the master of its own fate and that if something fundamental changes in the euro, then the pair would strengthen but if the moves are led by the dollar, then it means that the fate of the EURUSD pair is no longer in the hands of the euro and that is a cause for concern.
The pair did trade just below 1.0800 for sometime during the week but we had warned at that time that this would be a crucial region from where a correction was quite possible and this is what we saw during the later part of the week as the dollar strength returned all across the board. As the markets began to get used to what Trump and his team would be doing, the uncertainty slowly faded and this helped the dollar as the focus shifted away from Trump and began to lie firmly on the Fed and its rate hikes and also on the incoming data. Since the beginning of the year, the market had been too focussed on Trump and his campaign promises but now it is clear that he is going to follow through on most of his promises if not all and he has already set the ball rolling to achieve his promises. Though some of these promises are against norms, the market is atleast sure of what his mindset is and thats what the markets like, certainty and stability.
The week ahead is the first week of the new month and is usual, we have loads of data from the US, the most important being the NFP employment report on Friday. Good data from the US is critical for helping the Fed to hike rates in the coming months (though it is expected to hold rates in the coming week) and if the data from the US in the coming week, which includes average hourly earnings, unemployment claims and the FOMC statement and rate, continues to be strong we should see further strength in the dollar and we could see the EURUSD pair move below 1.0500.
EURUSD Technical Forecast Overview
Prev. Close 1.0699
Day’s Range 1.0657 – 1.0766
52 wk Range 1.0339 – 1.1616
1-Year Return – 1.27%
Weekly EURUSD Support and Resistance Forecast
S 1: 1.0612
S 2: 1.0577
S 3: 1.0522
R 1: 1.0722
R 2: 1.0757
R 3: 1.0812