The EURUSD pair gained slightly during the day yesterday as the dollar lost some strength due to the delay in the tax reform bill. The pair managed to bounce off from its lows and trades well above the 1.1850 region as of this writing and this volatility and choppiness is likely to continue until more clarity emerges.
EURUSD Moves Above 1.1850
The focus was clearly on the dollar yesterday and with this being the first full week of the last month of the year, traders are looking to be as careful as they can and not commit themselves in either direction without being sure of which direction is likely to move to. In the US, the headlines were about the tax reform bill and the continues issues around Flynn and both of these seemed to weigh on the dollar which was unable to make any significant progress yesterday.
These weighed on the stock indices in the US as well which, after moving higher during the first half of the day, corrected lower late in the day and finished only with small gains. We believe that this choppiness is likely to continue as the traders have an eye on the incoming data later in the week and also on the Fed rate hike which is widely expected to happen this month. In the medium term, all these developments should help support the dollar but for now, as the situation mends itself, we are likely to see some dollar weakness.
Looking ahead to the rest of the day, we might see the EURUSD pair continue to gain strength as the day wears on. The ISM Non-Manufacturing PMI data will be released from the US later during the US session but this is unlikely to have too much of an impact on the dollar and hence we can look forward to see some bullish consolidation.
This article was originally posted on FX Empire