EUR/USD Fundamental Forecast – July 1, 2016

The EUR/USD is trading at 1.1119 slightly in the red after Mr. Draghi speech on Wednesday and easing Brexit worries. The EU is pushing Mr. Cameron to move ahead now that the referendum is complete but Cameron wants to wait until a successor is name. He is completing two days of meeting with EU leaders.

Data surprised to the upside today as the annual inflation rate in the euro area left negative territory and posted a mini growth in June, fresh data showed on Thursday, with the headline gauge hovering deeply below the levels desired in the European Central Bank’s (ECB) shiny Frankfurt headquarters.

Consumer prices in the 19-nation euro bloc rose 0.1% on an annual and seasonally adjusted basis in the sixth month of the year, the preliminary headline CPI from Eurostat revealed. That’s more than the 0.1% fall seen in May, when the bloc recorded its fourth straight month of technical deflation. June, however, brought further downward pressures as the annual rate of inflation fell back a little above zero and has remained there since.

To address this, the bank’s Governing Council decided on December 3 to announce a new set of measures that included QE prolongation and further lowering of the deposit rate. Another chunk of measures then followed on March 10.

The U.K.’s Brexit vote has not triggered a “Lehman moment” in financial markets, despite the sharp sell-off, the vice-president of the European Central Bank (ECB) told CNBC.

Vitor Constancio denied comparisons between the U.K.’s vote to leave the European Union (EU) and the 2008 collapse of Lehman Brothers that triggered the global financial crisis.

“The reaction to Lehman, as you may recall, was that several markets froze … (with a) big impact all over the world. That was not the case this time,” he said.

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