It was a volatile week for the EURUSD pair but at the end of it all, we saw that the pair could not break the highs from last week. The fact that the highs from the last 2 weeks are quite similar and that the pair has not been able to break through higher, despite some weakness in the dollar, should be a matter of concern for the euro bulls in the week ahead.
EURUSD Highly Volatile
There were not fundamentals or economic events that dominated the headlines last week with the focus clearly on the dollar and the tax reform bill. We also had a speech from the outgoing Fed Chief Yellen and the incoming Chief Powell and both of them more or less confirmed the rate hike in December. But this had already been priced into the markets and hence we did not see much of an impact on the dollar strength due to this. We also had a missile launch test from North Korea which has become quite common nowadays that the market has begun to largely ignore that as well.
The tax reform bill has made smooth progress through the Senate so far and it looks as though Trump will have enough voted to push it through and it looks like it is only a matter of time before it passes. This has helped to boost the dollar and keep it steady. Towards the end of the week, we had reports that Flynn is likely to testify against Trump and it led to a whipsaw move in the dollar and it remains to be seen how that story develops over the weekend.
Looking ahead to the upcoming week, it is a new week of the month and hence we have the usual slew of data that includes the ADP and the NFP employment reports from the US. We are also going to see a speech from Draghi and these events should guarantee some volatility in the EURUSD pair. We believe that the dollar is likely to strengthen during December and this should keep the pair under pressure in the coming week.
This article was originally posted on FX Empire
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