EUR/USD Fundamental Forecast – May 4, 2016

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Published: May 3, 2016, 12:33 UTC

The EUR/USD skyrocketed today to trade at 1.1590 adding 56 points as it seemed to benefit from safe haven moves. EURUSD now blow through decent supply/res

The EUR/USD skyrocketed today to trade at 1.1590 adding 56 points as it seemed to benefit from safe haven moves. EURUSD now blow through decent supply/res at 1.1600 to post 1.1615. EURJPY demand is helping as USDJPY hangs onto the strong demand at 105.50.

The euro climbed against its major rivals in European trading on Tuesday, on the back of a weaker dollar, and as the European Central Bank Executive Board member Benoit Coeure said that the central bank is unlikely to cut the deposit rate into “absurdly low levels.”

The policymaker said that thus far negative rates have not had a major impact on market makers themselves. On the other hand, banks’ profitability has improved due to a mix of lower funding costs, increased lending volumes and lower loan-loss provisions, Coeure said.

“To be sure, this would not necessarily remain true if the deposit facility rate were to be set at significantly lower levels.”

“But this is why I have said elsewhere that we would not take it to absurdly low levels,” he added.

Figures from Eurostat showed that producer prices advanced 0.3% on month, confounding expectations for a 0.1% fall. In February, producer prices had dropped 0.7%.

Producer prices fell 4.2% year-on-year in March, the same pace of decline as seen in February. Prices were expected drop 4.6%.

The currency was also underpinned by yesterday’s data showing improvement in manufacturing activity in Germany and Eurozone.

The final PMI for the Eurozone’s manufacturing sector was revised up to 51.7 from flash score of 51.5, while Germany’s manufacturing PMI climbed to a three-month month of 51.8 in April from 50.8 in the prior month.

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.

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Wednesday, May 4, 2016

Cur.	Event	Actual	Forecast	Previous
	Japan – Constitution Day
AUD	Building Approvals (MoM) (Mar)		-3.0%	3.1%
CNY	Caixin Manufacturing PMI (Apr)		49.9	49.7
AUD	Interest Rate Decision (May)		2.00%	2.00%
GBP	Manufacturing PMI (Apr)		51.2	51.0