EUR/USD Fundamental Forecast – May 30, 2016

The EUR/USD dipped 18 points to 1.1176 as the greenback continued its rally ahead of Janet Yellen’s Harvard address later today. The US Dollar traded higher against its top counterparts while gold and crude oil prices tracked S&P 500 futures downward after leaders of G7 countries released a draft communiqué from their meeting in Shima, Japan. The greenback advanced alongside front-end US bond yields, suggesting the markets interpreted the document as bolstering the likelihood of a near-term rate hike from the Federal Reserve.

The dollar index rose on Friday, on track for its strongest monthly performance since last November amid expectations the Federal Reserve may raise rates in coming months and investors awaiting fresh guidance from the head of the U.S. central bank.

The index was up 0.1 percent at 95.259, having pulled back from Wednesday’s two-month peak of 95.661, with month-end rebalancing flows by asset managers likely to limit the gains, traders said. Holidays in Britain and the U.S. are likely to curtail volumes on Monday.

The ECB has increased its already massive stimulus program, including rate cuts and asset purchases, in a bid to stimulate growth, lending and restore inflation to the region while prices remain low and far from the bank’s near-2 percent target. The last inflation reading in April revealed that the region had fallen back into deflationary territory.

Weber did not think that the central bank would change its strategy or even start to think of tightening its monetary policy yet.

“Europe is in a totally different place (to the United States). The economy is still very weak and we don’t really see a lot of growth on the horizon, in that environment I think it would be a mistake for the ECB to tighten. I see them more firmly on hold at the moment to see if these more drastic measures they’ve taken will work out.”

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:

Monday, May 30, 2016

Government Bond Auctions

Date Time       Country           Auction

May 30 11:10 Italy Holds bond auction

Jun 01 10:30 Denmark Holds bond auction

Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl

Jun 01 11:30 UK 1.5% 2021 Gilt

Jun 01 17:20 Sweden Announces details of bond auction on Jun 08

Jun 02 10:30 Spain Holds bond auction

Jun 02 11:03 Sweden Holds I/L bond auction

Jun 02 11:50 France Holds bond auction