EUR/USD Fundamental Forecast – May 25, 2016

By:

Published: May 24, 2016, 10:36 UTC

The EUR/USD tumbled after lackluster German ZEW data hit the wires. The euro fell by 40 points to trade at 1.118 as the greenback continued to rally and

EUR/USD Fundamental Forecast – May 25, 2016

The EUR/USD tumbled after lackluster German ZEW data hit the wires. The euro fell by 40 points to trade at 1.118 as the greenback continued to rally and gold fell. Worries about Greece disappeared today as the new funding was approved. The latest release of Germany’s ZEW survey of economic sentiment shows that economists are not taking a strong run as a reason to be cheerful about the future. In part, this appears to be down to the risk that the UK will vote to leave the European Union.

The think-tank’s widely-watched (though not universally admired) index covering current conditions rose to 53.1 in May, up from 47.7 and well above expectations. But the ‘expectations’ survey slid by 4.8 points to 6.4, against forecasts of 12. (Financial Times).

The strong growth of the German economy in the first quarter of 2016 appears to have surprised the financial market experts. However, they seem not to expect the economic situation to improve at the same pace going forward. Uncertainties regarding developments such as a possible Brexit currently inhibit a more optimistic outlook.

The US dollar continued its weeklong rally following the release of hawkish FOMC minutes. Extending the Fed’s hawkish signals last week that a June US rate rise could be in the cards, James Bullard, president of the St. Louis Fed and a voting member of the policy-setting Federal Open Market Committee, warned that markets could be behind the curve on the Fed’s intentions.

Since raising rates in December for the first time in nine years, the Fed in March forecasted essentially two rate rises for this year, but markets have had much lower expectations amid a batch of weaker US economic data.

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:

Wednesday, May 25, 2016

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock			-1.140M
NZD	Trade Balance (YoY) (Apr)		-3,940M	-3,380M
NZD	Trade Balance (MoM) (Apr)		60M	117M
AUD	Construction Work Done (QoQ) (Q1)		-1.5%	-3.6%
EUR	EU Finance Ministers Meeting
USD	Goods Trade Balance (Apr)		-60.10B	-56.90B
USD	FOMC Member Harker Speaks
USD	Services PMI (May)		53.1	52.8
CAD	Interest Rate Decision		0.50%	0.50%
USD	Crude Oil Inventories			1.310M
USD	FOMC Member Kashkari Speaks
USD	FOMC Member Kaplan Speaks