EUR/USD Fundamental Forecast – May 24, 2016

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Published: May 23, 2016, 10:30 UTC

The EUR/USD took a nosedive after lackluster PMI data was released today. Services and manufacturing data missed expectations by a long shot. The euro

EUR/USD Fundamental Forecast – May 24, 2016

The EUR/USD took a nosedive after lackluster PMI data was released today. Services and manufacturing data missed expectations by a long shot. The euro fell 15 points to 1.1208. Greece once again in the news as anti-austerity rioters object violently to government reforms of the pension system. The government may have got the reforms through parliament but the International Monetary Fund and Germany are already insisting that the country still needs further contingency measures to ensure that it meets its budget targets.

In the meantime, hopes that an agreement with Turkey allowing visa-free travel for its citizens in the EU in exchange for a control on migrants from other areas leaving the country has been thrown into doubt after Turkey’s President Recep Tayyip Erdogan rejected EU demands that the country change its anti-terror laws.

With this agreement in the balance, chances are that the flow of migrants crossing into the EU will not be halted and that the numbers seen in previous summers will grow even larger.

The issue has already led to the rise of far-right parties in many member states and will continue to threaten the cohesion, as well as the future, of the EU in the months to come.

But of even more immediate concern is the growing threat that the UK will vote to leave the EU in a referendum scheduled for June 23.

Chris Williamson the Chief Economist of Markit wrote:

A disappointing flash eurozone PMI for May adds further to the suggestion that the robust pace of economic growth seen in the first quarter will prove temporary.

The Markit Flash Eurozone PMI – This is based on approximately 85-90% of normal final monthly replies – slipped to a 16-month low of 52.9 in May, down from 53.0 in April. Economists were expecting an improvement to 53.2, according to a Reuter’s poll. Expectations were exceeded in both France and Germany, leaving the survey data suggesting that the ‘periphery’ underperformed relative to expectations.

The latest two months’ weak data imply that economic growth has likely slowed in the second quarter, down to a pace of just 0.3%

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.

Upcoming Economic Events that you should be monitoring:

Tuesday, May 24, 2016

Cur.	Event	Actual	Forecast	Previous
USD	FOMC Member Harker Speaks
AUD	RBA Governor Stevens Speaks
EUR	ZEW Economic Sentiment		23.4	21.5
EUR	Eurogroup Meetings
USD	New Home Sales (MoM) (Apr)		2.0%	-1.5%
USD	New Home Sales (Apr)		523K	511K