EUR/USD Fundamental Analysis – week of April 10, 2017
As we had mentioned in our forecasts for last week, the EURUSD pair continued to weaken through the week and there has been no respite so far. Looking at the bigger picture, the pair is moving within a larger range between the 1.09 and 1.05 region and as we had mentioned in our monthly forecasts, most of the major pairs seem to have settled within a 400-500 pip range and the associated central banks also seem to be comfortable with the ranges and thats why we have been seeing a lot of ranging and consolidation happening in the different pairs.
Euro Breaks Down
Though the EURUSD pair spent the first part of the week within a tight range around the 1.0650, it was only a matter of time before the range was broken, especially with the range of news that was to be released later on in the week. The ADP report from the US came in very strong but the pair still could not break out of the range. It was only the attack by the US on a Syrian airbase that ratcheted up the risks globally and increased the volatility.
The NFP from the US came in much weaker than expected but it was largely ignored as the unemployment rate came in stronger. The markets seemed to be more worried about the developments in Syria and hence we saw a flow of funds towards safety which helped to keep the bid under the dollar and also under the gold prices. It was only late on Friday that the EURUSD pair broke below the lows of the weekly range and we saw it ending the week below 1.06. We believe that the pair is well on its way towards 1.05, albeit a bit slowly than expected.
Looking ahead to the coming week, we have a speech from Yellen and we also have the PPI, CPI and Retail sales data from the US but not much data from Europe as such. We expect the dollar to continue to trade strongly which should keep the EURUSD pair under pressure and move it towards 1.05 during the course of the week.