The Euro had a choppy day yesterday and this is probably a precursor to the price action that we are going to see in the markets over the next couple of days. The EURUSD pair moved up through the 1.18 and went as high as 1.1834 and then dropped down towards the end of the day to end the day below 1.18.
EURUSD Chops Around
All these moves were mainly flow driven as there was not much fundamental news floating around. The anticipation around the tax reform bill continues to dominate the markets and helped to keep the bid under the dollar during the course of the day yesterday but so far, the anticipation remains just that and there has not been any follow through action from the Senate as yet. It is widely expected that the action would begin today and it could end today or tomorrow.
By all practical means, it appears as though the tax reform bill should get passed by today or tomorrow and this is likely to lead to a bout of dollar buying all across the board. This is unlikely to be enough to break through the set ranges in the EURUSD pair which has been in existence over the past couple of months and hence we are likely to see the pair continue to range as we head towards the end of the year.
Looking ahead to the rest of the day, apart from the building permits data from the US, there is not much by way of economic data from the US or the Eurozone. So the focus of the markets is likely to continue to be on the tax bill in the US and its passage and it is only a matter of time before it gets passed. We could see some volatility following the passage of the bill and the US stock indices could move to newer highs but its impact on the currency markets is likely to be minimal.