EUR/USD Weekly Fundamental Analysis – April 18-22, 2016 -Forecast

The EUR/USD eased from its high above 1.14 to close at 1.1284 with a loss of more than 1% this week.  The U.S. dollar declined against most major currencies Friday as the economic data from the country came out negative.

The Federal Reserve reported Friday that U.S. industrial production dropped 0.6 percent in March for two months in a row, far below market consensus of a 0.1-percent decrease.

In the previous session, the U.S. Labor Department announced that the Consumer Price Index for all urban consumers increase 0.1 percent in March on a seasonally adjusted basis. The index for all items less food and energy inched up 0.1 percent in March after rising 0.3 percent in February, lower than market consensus. Analysts said the recent downbeat economic data may keep the Federal Reserve cautious in raising interest rates.

Speculation over Fed timing will draw considerable speculation considering the FOMC is set to meet again on April 26-27 (next week). While there are a number of officials who have suggested this month’s meeting is both ‘live’ (meaning it can be a hike like any other), few have suggested it was even a remote probability for a timely follow up to December’s liftoff. However, to stir the Dollar, we don’t need conviction certainty of a rate hike this yearly. All that is necessary is enough of a foothold to persuade the market into believing at least one hike is certain this year and/or even highly probably by June.

The ECB is scheduled to determine monetary policy this week, but their last effort to escalate accommodation left the market with a distinct feeling that monetary policy at the dovish extreme is losing its influence – and central banks that pursue it, credibility.

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.

Major Economic Events for the week:

Government Bond Auctions

Date Time       Country           Auction

Apr 18 11:00 Belgium Holds OLO auction

Apr 18 13:00 Norway Details of bond auction on Apr 20

Apr 20 11:05 Norway Holds bond auction

Apr 20 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Apr 20 17:20 Italy Details of BTP€i auction

Apr 20 17:20 Sweden Details of bond auction on Apr 27

Apr 21 10:30 Spain Holds bond auction

Apr 21 11:03 Sweden Holds I/L bond auction

Apr 21 11:50 France Holds bond auction

Apr 21 19:00 US Holds 5-year TIPS auction

Apr 22 17:20 Italy Announces details bond auction