EUR/USD Fundamental Analysis March 5, 2013 Forecast

EUR/USD Fundamental Analysis March 5, 2013 Forecast

Analysis and Recommendations:

The EUR/USD is trading at 1.2998 breaking the all important 1.30 level and holding today.  The euro remained near a 2-1/2 month low on rising expectations that eurozone economic worries could prompt the European Central Bank to cut interest rates sooner than previously anticipated.

Although a Reuter’s poll last week showed economists expected the ECB to keep rates on hold this Thursday, some strategists said euro weakness would persist on growing expectations bank Chief Mario Draghi would hint at future cuts. Poor eurozone sentiment and unemployment data since last week could compel the ECB to revise down its outlook for the currency bloc’s economy and consider earlier rate cuts, they said.

Data on Monday showed euro zone sentiment tumbled in March on renewed political uncertainty in Italy, the euro zone’s third largest economy. Italy’s inconclusive election last week also weighed on the currency. Analysts are concerned that without a stable government, the country will be unable to pass reforms required to get its borrowing and debt under control.

Markets focus on the political deadlock in Italy, the euro-area Finance minister’s meeting, and the ECB’s meeting and press conference on Thursday. EUR will be most vulnerable to headline risk emanating from discussions over the ESM bailout mechanism and its ability to recapitalize financial institutions. It was hoped that such a development would help reduce the sovereign-banking sector linkage that has hampered the ECB’s ability to implement broad monetary policy accommodation as a result of fragmentation in financial markets. The risk for EUR heading into Thursday’s meeting is for a shift in tone, toward that seen at the December press conference when ECB President Draghi appeared far more concerned than in his subsequent appearances.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports

Economic Data March 4, 2013 actual v. forecast

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Government Bond Auction

Date Time Country 

Mar 05 10:10 Norway

Mar 05 10:15 Austria

Mar 05 10:30 Belgium

Mar 05 10:30 UK

Mar 05 15:30 UK

Mar 06 10:10 Sweden

Mar 06 10:30 Germany

Mar 07 09:30 Spain

Mar 07 09:50 France

Mar 07 15:30 Sweden

Mar 07 16:30 Italy

Mar 07 16:00 US

Mar 08 11:30 Belgium

Mar 08 16:30 Italy