EUR/USD Monthly Fundamental Forecast – July 2016

The EUR/USD closed the month of June at 1.1105 below its monthly trading range of 1.13 falling steadily as the decision by the UK is weighing heavily on the Eurozone. The pair declined 0.39% for the month but is surprisingly up on an annual basis seeing a gain of 2.28% as the US dollar gained as a safe haven even though the Fed have signal no interest rate increases anytime soon.

Federal Reserve vice chairman Stanley Fischer said in an interview on Friday that it will still too soon to evaluate the impact of the Brexit, as the U.K.’s decision to leave the European Union was known.

However, along much the same lines as St. Louis Fed president James Bullard, Fischer suggested that the impact was probably much smaller than for others.

He told CNBC that the Fed would have a better idea of economic conditions by the July meeting and that the economy was the Fed’s number one priority.

Fischer noted that his outlook continued to be for a gradual improvement in the economy and insisted that most of the data since the May payrolls report was looking good.

It is not yet clear how the EU will organize its negotiating team, but the European Commission will take charge of the details.

The final deals on UK withdrawal and a future UK-EU relationship will have to be agreed by the EU’s top institutions – the European Council, Commission and European Parliament.

Our forecast for July 2016: 1.10-1.118

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.