The EURUSD pair entered into a phase of consolidation and ranging as the dollar managed to steady itself after being on the backfoot over the last couple of weeks. The pair faced some stiff resistance near the 1.2080 region and has since corrected back lower and is now trading just above the 1.20 region as of this writing.
EURUSD In Consolidation
The focus of the day yesterday was on the dollar especially with the FOMC meeting minutes from December scheduled to be released late in the day. The incoming data from the US had been strong with the ISM manufacturing info coming in stronger than expected. This helped to lend some support to the dollar even before the minutes were released. The FOMC minutes came in and it managed to lend even more support to the dollar.
Though there was nothing new or special in the minutes, the Fed gave an assurance to the markets that the members were looking to hike rates in a grdual manner and the market interpreted this as being hawkish as it expects the Fed to hike 3 times this year. This expectation helped to push the dollar higher and the euro ended the day just below the 1.20 region and it looks as though more weakness may be along the way.
Looking ahead to the rest of the day, we do not have any major news from the Eurozone but we have the ADP employment report from the US. This usually gives a good hint about the employment data before the NFP comes in and the market would be expecting the trend of strong data from the US to continue and if that happens, the dollar bulls would begin buying the dollar again which should help to push the pair further lower during the course of the day. For now, it is better to wait and watch where the market wants to go before jumping in.