EUR/USD Fundamental Analysis – week of July 25, 2016 -Forecast

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Updated: Jul 24, 2016, 11:21 UTC

The EUR/USD ended the week at 1.0976 falling to its lowest level near the end of the trading session on Friday. The pair is down 0.54% for the week after

The EUR/USD ended the week at 1.0976 falling to its lowest level near the end of the trading session on Friday. The pair is down 0.54% for the week after the ECB held rates and policy and Mario Draghi did little to shake up the currency.

There was no drama around today’s ECB press conference as the decision was to keep stimulus program unchanged. An impressive presentation by Mario Draghi, the ECB president, indicated there were few signs of major market dislocation in the immediate aftermath of the UK ‘Brexit’ vote and, while he noted that a proper assessment of the economic impact on the Euro area wasn’t yet possible, he provided reassurance that the ECB would respond appropriately in the event that further action was required.

If the ECB is calm, it certainly isn’t complacent. As a result, any marked evidence of weakness in upcoming surveys is likely to cause expectations of additional ECB easing in September to build.

Uncertainty about future policy remains Mr Draghi will not be unhappy that after his pronouncements considerable uncertainty remains as to whether the ECB will ease again, when such action might occur and what measures might be taken. However, by repeatedly emphasizing that markets should appreciate that the ECB is ready, willing and able to act, he clearly focused attention on the likelihood that some supportive measures will be announced when the ECB holds its next formal policy meeting on September 8th.

After the usual formal announcement of the Governing Council’s policy decisions, the ECB’s opening press statement today discussed at some length what was clearly the focus of attention for the past four weeks; the consequences for the Euro area of the UK vote to leave the EU. The inclusion and prominent positioning of two paragraphs on the issue emphasized that in spite of Mr Draghi’s calm demeanor today, the recent ‘Brexit’ vote is a matter of immediate and substantial concern.

Upcoming week will be significant for US economy as well as European. FOMC meeting and Europe stress testing are in focus for upcoming week.

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Major Economic Events for the week:

Date	Currency	Name	Volatility	Previous	Consensus
7/27/2016	AUD	Consumer Price Index (YoY)	3	1.3	1.1
7/27/2016	USD	Durable Goods Orders	3	-2.2	-1.1
7/27/2016	USD	Fed’s Monetary Policy Statement	3
7/27/2016	USD	Fed Interest Rate Decision	3	0.5
7/28/2016	JPY	BoJ Press Conference	3
7/29/2016	JPY	BoJ Interest Rate Decision	3	-0.1	-0.2
7/29/2016	JPY	BoJ Monetary Policy Statement	3
7/29/2016	EUR	Gross Domestic Product (YoY)	3	1.7	1.6
7/29/2016	EUR	Gross Domestic Product (QoQ)	3	0.6	0.3
7/29/2016	EUR	Consumer Price Index (YoY)	3	0.1
7/29/2016	EUR	Consumer Price Index – Core	3	0.9