EUR/USD Fundamental Forecast – July 25, 2016

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Published: Jul 22, 2016, 12:17 UTC

The EUR/USD dipped 9 points as the greenback rallied. The euro is trading at 1.1017 remaining in its recent trading range and showing no reaction to Mr.

EUR/USD Fundamental Forecast – July 25, 2016

The EUR/USD dipped 9 points as the greenback rallied. The euro is trading at 1.1017 remaining in its recent trading range and showing no reaction to Mr. Draghi’s press conference and the ECB decision yesterday. The euro strengthened against most major rivals in the early European session on Friday, after data showed that the flash Eurozone composite purchasing managers’ index fell less than expected in July.

Data from the Markit showed Eurozone private sector expanded at the weakest pace in one-and-a-half-years in July. The flash composite output index fell to 52.9 in July, an 18-month low, from 53.1 in June. Nonetheless, the score was above the expected level of 52.5.

The services Purchasing Managers’ Index dropped marginally to 52.7 from 52.8 in June. The score was expected to drop to 52.3.

Also, Germany’s private sector expanded at the fastest pace in seven months in July. The flash composite output index rose to 55.3 from 54.4 in June. The index reached its highest level in 2016 so far with both manufacturers and service providers reporting stronger expansions.

The services Purchasing Managers’ Index climbed unexpectedly to 54.6 from 53.7 a month ago. It was forecast to drop to 53.2.

The manufacturing PMI dropped less-than-expected to 53.7 from 54.5 in the previous month. The score was expected to fall to 53.4.

On Thursday, the ECB followed the cue of the BoE and did not lower the benchmark rate of 0.00%. There had been some speculation that the bank might extend its QE program of €80 billion/mth beyond March 2017, but ECB head Mario Draghi did not bite. Draghi claimed that the asset-purchase program had been “quite successful”, an assertion that many market players would dismiss as positive spin, given current inflation levels are nowhere near the ECB’s stated target of around 2 percent.

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Monday, July 25, 2016

Country	Name	Volatility	Previous
JPY	Adjusted Merchandise Trade Balance	2	269.8
JPY	Merchandise Trade Balance Total	2	-40.7
JPY	Imports (YoY)	2	-13.8
JPY	Exports (YoY)	2	-11.3
EUR	IFO – Expectations	2	103.1
EUR	IFO – Business Climate	2	108.7
EUR	IFO – Current Assessment	2	114.5
USD	Dallas Fed Manufacturing	2	-18.3