The EURUSD pair turned weak late on Friday on the back of positive developments in the US surrounding the tax reform bill. This forced the pair to push downwards through the 1.18 region and the pair now trades in the 1.1750 region looking for more weakness during the course of the week as the dollar strengthens during this period.
The pair had been trading in a steady manner for much of the day on Friday. With all the central banks out of the way for the rest of the year, having completed all their announcements on Thursday, the day was expected to be a quiet one with a lack of fundamental drivers. But as we entered into the US session, we received reports that more lawmakers, who had been sitting on the fence with regard to the tax reform bill, had switched over to support the bill and that it would only be a matter of time before the bill is passed.
The bill holds a lot of goodies for the corporates, in the form of large tax cuts and seeks to benefit the corporates and big investors in a large manner. This news was welcomed widely around the US markets with the indices rising higher to show their approval and in anticipation. This helped the dollar to strength across the board and this led the pair lower. This dollar strength is expected to continue in the markets for the short term and this is likely to be the only source of volatility as we wind down for the year.
Looking ahead to the rest of the day, we do not have any major economic news and hence we can safely expect the consolidation to continue during the Asian and European sessions. Action is expected to pick up during the US session with the bill expected to be passed by today or tomorrow in the US. This should lead to another bout of dollar buying.