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EUR/USD Fundamental Forecast– August 25, 2016

By:
James Hyerczyk
Updated: Aug 25, 2016, 07:38 UTC

The EUR/USD was under pressure early Wednesday, closing at 1.1275, down 0.0031 or -0.27%, as investors shifted their focus on the central bankers’

EURUSD

The EUR/USD was under pressure early Wednesday, closing at 1.1275, down 0.0031 or -0.27%, as investors shifted their focus on the central bankers’ symposium in Jackson Hole, Wyoming and the possibility that Fed Chair Janet Yellen may make a few hawkish statements regarding the direction of U.S. interest rates in her speech on Friday.

Currently, Fed Funds traders are putting the possibility of a 25-basis point rate hike in September at 18%, in December at 50% and 100% in September 2017. Obviously, the biggest impact on the Euro will come from comments from Yellen which support a September rate hike. In doing so, she’s be joining the camp of New York Federal Reserve President William Dudley, who said last week that a September rate hike “is possible.”

“We’re edging closer towards the point in time where it’ll be appropriate to raise interest rates further,” Dudley said. “I think it’s possible,” he added, referring to a possible rate hike at the Fed’s next policy meeting on September 20-21.

Yellen will trigger a huge bearish response by the EUR/USD if she gives any indication that rates could be raised in September. It’s all speculation, but Wednesday’s price action suggests that investors are considering a hawkish response from the Fed chief.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

30-Minute EURUSD

Today’s economic releases:

Cur. Event Actual Forecast Previous
  NZD Trade Balance (YoY) (Jul) -3030M -2980M -3310M
  NZD Trade Balance (MoM) (Jul) -433M -350M 127M
  AUD Construction Work Done (QoQ) (Q2) -3.7% -1.9% -0.3%
  EUR German GDP (QoQ) (Q2) 0.4% 0.4% 0.4%
  EUR German GDP (YoY) (Q2) 3.1% 3.1% 3.1%
  GBP BBA Mortgage Approvals   38.5K 40.1K
  USD Manufacturing PMI (Aug)   52.7 52.9
  USD Existing Home Sales (Jul)   5.51M 5.57M
  USD Existing Home Sales (MoM) (Jul)   -0.4% 1.1%
  USD Crude Oil Inventories   -0.455M -2.508M
  USD Cushing Crude Oil Inventories   -0.724M
  AUD Private New Capital Expenditure (QoQ) (Q2)   -5.2%

Upcoming Economic Events that you should be monitoring:

Thursday, August 25, 2016

Cur. Event Actual Forecast Previous
  EUR German Business Expectations (Aug)   102.5 102.2
  EUR German Current Assessment (Aug)   114.9 114.7
  EUR German Ifo Business Climate Index (Aug)   108.5 108.3
  USD Jackson Hole Symposium  
  USD Core Durable Goods Orders (MoM) (Jul)   0.5% -0.4%
  USD Durable Goods Orders (MoM) (Jul)   3.3% -3.9%
  USD Initial Jobless Claims   265K 262K
  USD Services PMI (Aug)   52.0 51.4
  JPY National Core CPI (YoY) (Jul)   -0.4% -0.5%
  JPY Tokyo Core CPI (YoY) (Aug)   -0.3% -0.4%

Government Bond Auctions

Date/Time Country Type

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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