EUR/USD Fundamental Forecast – May 6, 2016

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Published: May 5, 2016, 10:34 UTC

The EUR/USD dipped 50 points to trade at 1.1436 as the greenback recovered a bit today. According to the Irish Examiner economic growth in the eurozone

EUR/USD Fundamental Forecast – May 6, 2016

The EUR/USD dipped 50 points to trade at 1.1436 as the greenback recovered a bit today. According to the Irish Examiner economic growth in the eurozone will be steady but slow in the second quarter, surveys suggested yesterday, underlying European Commission concerns about the vulnerability of the currency bloc’s upturn.

The common currency hit a nine month high against the dollar this week, in gains that pose potential challenges for the European Central Bank and the Eurozone’s already anemic economic growth rate.

But many analysts believe that further strength will be capped by the prospect of ECB intervention and of foreign investors selling off eurozone assets. Despite the rally, many analysts are standing by long standing predictions that the euro will hit parity with the dollar by the end of this year.

The euro’s gains come despite unprecedented stimulus from the ECB, which needs a lower currency to help stoke inflation. The currency’s next moves will influence monetary policy in the coming months, while providing a pointer on future earnings for some of Europe’s biggest companies.

The Wall Street Journal said today in an article that on Tuesday, the euro broke above $1.16 for the first time since last August after seven consecutive trading sessions of gains. On Wednesday, the currency was already edging lower, falling 0.2% to $1.148.

The euro is now up by 5.7% against the dollar this year-to-date. The dollar has fallen for much of the last six months, as economists predict a slower pace of U.S. interest rates rises. Higher rates tend to attract money into a country or currency bloc as investors look for higher yields.

Though the ECB says it doesn’t target foreign exchange rates, it needs a weaker currency to push up the Eurozone’s low inflation. The central bank’s now expects inflation of just 0.3% this year, below its target of around, but below, 2%.

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:

Friday, May 6, 2016

Cur.	Event	Actual	Forecast	Previous
USD	FOMC Member Bullard Speaks
USD	FOMC Member Kaplan Speaks
USD	FOMC Member Lockhart Speaks
USD	FOMC Member Williams Speaks
AUD	RBA Monetary Policy Statement
USD	Average Hourly Earnings (MoM) (Apr)		0.3%	0.3%
USD	Nonfarm Payrolls (Apr)		202K	215K
USD	Participation Rate (Apr)			63.0%
USD	Private Nonfarm Payrolls (Apr)		193K	195K
USD	Unemployment Rate (Apr)		5.0%	5.0%
USD	Baker Hughes U.S. Rig Count			332