Introduction

In this article EURUSD will be analyzed both fundamentally and technically and as known nothing is impossible in Forex so different scenarios will be drawn to express about the most probable scenarios with the EURUSD.

What is affected the move of EUR/USD nowadays:

Fundamental analysis:

EURUSD is affected now by two different policies by both European Center Bank (ECB) and United States Federal Reserve (FED) and also affected strongly by ECB quantitative easing which strongly hit Euro, finally Euro and other currencies is affected due to strong growth in US in the last months which make US$ to be favored.

  • Different policies by ECB and FED:

ECB Injected quantitative easing (QE) several times last year, it slashed interest rate into and is expected to send it below zero in next ECB March meeting.

In different, US FED has just raised interest rate for the first time from ten years, FED delayed its first rate hike more than once in order to prevent broad US$ gains which may dampen US growth, this time rate hike is very near but if something horrible hit markets again, more rate hike may be delayed more.

  • ECB QE to support inflation :

ECB announced and expanded QE several times, slashed interest rate and is expected to do more in next March meeting, ECB is ready to do what is necessary to support inflation which still below ECB target, lower oil and fragile economy still the main causes of lower EU inflation.



  • Moderate US growth:

US growth still so strong in last quarter as it growth increase 3.7% in last quarter VS 0.6% quarter before, last US growth Q/Q were as follows (4.6%, 4.3%, 2.1%, 0.6% and 3.7%, 2% and 0.7% last quarter), US growth still moderate and accepted for FED.


Technical analysis:

  • Pair review:

EURUSD broke 1.1050 finally reaching nearly 1.1400 for first time from 3 months, pair still vulnerable to strong losses due to policy divergence but above 1.1050, pair still supported to hit 1.1500-1.1700 before falling again, any clear close below 1.1000 will open the door again for bears to control again to reach 1.0500, any break above 1.1700 will open the door aggressively for pair bulls to send the pair towards 1.2000-1.2500.


  • Different scenarios:
  1. EURUSD will stay move between 1.1000 and 1.1700 without any break up or down, this scenario may have probability 40%, EURUSD broke 1.1000 finally and bulls will fight to defend 1.1000, bears will defend to care 1.1700 will not be broken.
  2. EURUSD will break lower 1.1000 again aiming 1.0500, this scenario may have probability 35%, pair may break lower to hit 2015 low near 1.0500.
  3. EURUSD will break higher current range aiming 1.2000-1.2500, this scenario may have probability 25%, clear break above 1.1700 will send the pair strongly higher to at least 1.2000.
Conclusion:

EURUSD still affected by different ECB and FED policies which supported gains for USD against euro, technically pair still expected to move lower in the next weeks if 1.1700 holds.
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