EUR/USD Weekly Fundamental Analysis July 23-27, 2012, Forecast

Get Forex buy/sell signals directly to your email and by SMS.
To learn more click here

Introduction: Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

  • The interest rate differential between the European Bank (ECB) and the Federal Reserve (FED)
  • Dollar strength drives EUR/USD lower
  • FED intervention to weaken the dollar the sends EUR/USD higher

 

Weekly Analysis and Recommendation:

The EUR/USD faced a difficult week. The week opened with anticipation of news during Chairman Bernanke’s two days of testimony before Congress. As soon as his prepared statement was released markets realized that Mr. Bernanke was going to hold to the June FOMC statement and offer nothing else.

Market focus turned to Spain and Italy and a bit of Greece, with finance costs soaring Spain came hat in hand to the EU asking for more funds.

In German, a different side of this story was unfolding; the German Constitutional Court took up the matter of the legality of the ESM throwing a wrench in the plans to fund bailouts through the ESM. The court eventually released the date of September 12 for its decision, holding the EU without plans until its ruling.

Date

Last

Open

High

Low

Change %

Jul 20, 2012

1.2156

1.2276

1.2283

1.2145

-0.99%

Jul 19, 2012

1.2277

1.2277

1.2323

1.2230

0.00%

Jul 18, 2012

1.2277

1.2296

1.2306

1.2217

-0.15%

Jul 17, 2012

1.2295

1.2266

1.2316

1.2189

0.24%

Jul 16, 2012

1.2266

1.2247

1.2290

1.2176

0.16%

Problems continued to compound after Chancellor Merkel made statements that she was not sure if the EU could survive. By the end of the week all hopes in the EU were dashed. Investors pulled from equities, commodities and currencies associated with the EU. Moving out to a broad array of markets and assets just away from the EU.

The US dollar returned to being strong by the end of the week supported by outstanding earnings reports which overcame negative eco data as investors once again heard the call for stimulus in the far off distance.

The top four risks to watch next week by way of factors that could impact the global market tone include Q2 US GDP on Friday, Chinese and European manufacturing data, fiscal progress reports out of beleaguered Greece and Portugal, and a continuation of the US Q2 earnings season.

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 of July 16 – 20 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event 

Actual

Forecast

Previous

Jul 16

EUR

Core CPI y/y

1.6%

1.6%

1.6%

 

USD

Core Retail Sales m/m

-0.4%

0.1%

-0.4%

 

USD

Empire State Manufacturing Index

7.4

3.9

2.3

Jul 17

GBP

CPI y/y

2.4%

2.8%

2.8%

 

GBP

RPI y/y

2.8%

3.0%

3.1%

 

EUR

German ZEW Economic Sentiment

-19.6

-17.3

-16.9

 

USD

Core CPI m/m

0.2%

0.2%

0.2%

 

USD

TIC Long-Term Purchases

55.0B

45.7B

27.2B

 

USD

Capacity Utilization Rate

78.9%

79.2%

78.7%

 

USD

Industrial Production m/m

0.4%

0.4%

-0.2%

Jul 18

GBP

Claimant Count Change

6.1K

6.2K

6.9K

 

GBP

Unemployment Rate

8.1%

8.2%

8.2%

 

CHF

ZEW Economic Expectations

-42.5

 

-43.4

 

USD

Building Permits

0.76M

0.77M

0.78M

 

USD

Housing Starts

0.76M

0.74M

0.71M

 

USD

Crude Oil Inventories

-0.8M

0.5M

-4.7M

Jul 19

CHF

Trade Balance

2.25B

2.21B

2.52B

 

EUR

Current Account

10.9B

5.3B

5.5B

 

GBP

Retail Sales m/m

0.1%

0.6%

1.5%

 

USD

Unemployment Claims

386K

367K

352K

 

USD

Existing Home Sales

4.37M

4.64M

4.62M

 

USD

Philly Fed Manufacturing Index

-12.9

-7.9

-16.6

Jul 20

EUR

German PPI m/m

-0.4%

-0.2%

-0.3%

 

GBP

Public Sector Net Borrowing

12.1B

11.8B

16.1B

Historical:

Highest: 1.5091 USD on Dec 03, 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on Jun 07, 2010.

 

Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD

Date

Time

Currency

 Event

Previous

Jul 24

7:00

EUR

French Flash Manufacturing PMI

45.2

7:00

EUR

French Flash Services PMI

47.9

7:30

EUR

German Flash Manufacturing PMI

45.0

7:30

EUR

German Flash Services PMI

49.9

8:00

EUR

Flash Manufacturing PMI

45.1

8:30

GBP

BBA Mortgage Approvals

30.2K

9:00

EUR

Flash Services PMI

47.1

13:00

USD

Flash Manufacturing PMI

52.5

Jul 25

8:00

EUR

German Ifo Business Climate

105.3

 

8:30

GBP

Prelim GDP q/q

-0.3%

10:00

GBP

CBI Industrial Order Expectations

-11

13:00

EUR

Belgium NBB Business Climate

-13.2

14:00

USD

New Home Sales

369K

14:30

USD

Crude Oil Inventories

 

Jul 26

6:00

EUR

GfK German Consumer Climate

5.8

8:00

EUR

M3 Money Supply y/y

2.9%

12:30

USD

Core Durable Goods Orders m/m

0.7%

12:30

USD

Unemployment Claims

 

14:00

USD

Pending Home Sales m/m

5.9%

Jul 27

27th-31st

GBP

Nationwide HPI m/m

-0.6%

All Day

EUR

German Prelim CPI m/m

-0.1%

7:00

CHF

KOF Economic Barometer

1.16

12:30

USD

Advance GDP q/q

1.9%

13:55

USD

Revised UoM Consumer Sentiment

72.0

Government Bond Auctions

Date  Time  Country 

Jul 23- n/a  UK

Jul 23  09:30  Germany

Jul 24  08:30  Netherlands

Jul 24  08:30  Spain 

Jul 24  15:30  Italy

Jul 24  17:00  US

Jul 25  09:30  Germany

Jul 25  15:30  Italy

Jul 25  17:00  US

Jul 26  00:30  Japan

Jul 26  09:10  Italy

Jul 27  09:10  Italy

Jul 27  17:00  US 

Want to read more articles like this one?
Enter your e-mail address and read FX Empire content directly from your inbox.
 
We value your privacy. Your e-mail address will not be shared.
About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

  View all of FX Empire Analyst - Barry Norman's Articles    
Share Your Thoughts: Post a Comment


Your email address will not be published.