The EUR/USD pair will try to keep its momentum. Overview for 03.01.2018

At the end of the year, the main currency pair won the “fight”, but more battles are ahead.

The end of 2017 saw a significant improvement of the EUR/USD pair as it added 13.6%. Capital markets have quite ambitious plans for this year, but all is in good time: 2018 will surely have its ups and downs.

During the first quarter, investors’ attention will still be focused on the implementation of the taxation system reform project in the USA. Everything is already settled and checked and now has to be put into effect. In the long-term, changes in the taxation system are surely a significant support for the American currency. Money will return to the country and this process of “USD absorption”, which the US Federal Reserve and the U.S. Department of the Treasury started earlier, will be intensified.

One shouldn’t wait for any serious decisions from Central Banks until March. In February, Janet Yellen will be replaced by Jerome Powell on the position of the US Federal Reserve Chairman. Investors and markets have already responded to this replacement, that’s why it won’t trouble anyone, because Powell supports pretty the same monetary policy as Yellen. Besides, the President Trump likes Powell. The Federal Reserve may be back to increasing the key rate at the end of March. The European Central Bank is not expected to tighten its monetary policy until September or October. The QE program will continue until this time, but the monthly volume of it will reduce from 60B to 30B Euros starting January 2018.

Macroeconomic statistics is not expected to surprise anyone in the nearest future as well. The US Labor market will continue to get more stable, the inflation will be growing slowly. However, both of these indicators the Labor market (although it’s improving) and the CPI, along with the Retail Sales, will remain a problem for the Eurozone.

There might be some geopolitical complications, for example between the USA and Russia, and some particular Middle East countries. In this case, the USD may become a “safe haven” asset, just like Gold of the Yen. But right now, this possibility is rather low and worries no one.

RoboForex Analytical Department