EUR/USD Fundamental Forecast– July 28, 2016

The Euro drifted sideways-to-higher early in the session on Wednesday as investors awaited the latest monetary policy statement by the U.S. Federal Reserve at 1800 GMT. The EUR/USD finished at 1.0996, up 0.0011 or +0.10%.

Traders are looking for the Fed to leave interest rates unchanged, but they will be searching for clues in its monetary policy statement as to the timing of the next rate hike. At this time, the odds of a September or December rate hike are about 50/50.

Earlier today, the Euro firmed slightly following the release of the Gfk German Consumer Climate Index, which measures the level of consumer confidence in economic activity. Today’s report came out better-than-expected at 10.0, versus an estimate of 9.9. This was slightly below the previously reported 10.1.

Later today, investors will get the opportunity to react to fresh U.S. economic data. U.S. Core Durable Goods Sold are expected to rise 0.3% versus last month’s 0.3% decline. Durable Goods Orders for June are expected to come in at -1.1%. However, this will be an improvement from last month’s 2.3% decline. Pending Home Sales are forecast at +1.4%, up substantially from last month’s 3.7% decline.

Strong reports today will keep the Fed on track to raise interest rates perhaps as early as September. The EUR/USD is likely to weaken early in the session if durable goods fall less in June than from a month earlier and if pending home sales can rebound from their biggest slump in six years.

Traders should be prepared for a possible surprise in the Fed statement that could cause a volatile reaction especially if the central bank says it will continue to keep interest rates down due to concerns over volatility in the markets due to the effects of Brexit and the slew of lower interest rates and additional stimulus from several central banks including the Bank of Japan on Friday, and the Bank of England and the Reserve Bank of Australia next week.

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.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, July 28, 2016

Government Bond Auctions

Date/Time Country Type

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction