EUR/USD Weekly Fundamental Analysis- November 30 – December 4, 2015 – Forecast

Weekly Analysis and Recommendation:

The EUR/USD closed just under the 1.06 level as the greenback gained while Mr. Draghi reviewed options and new kinds of stimulus for the ECB ahead of Thursday’s press conference. The euro is down 0.50 for the week. Turning to external catalysts, the ECB is first to take center stage. President Mario Draghi is expected to unveil an expansion of policy support. A range of options ranging from expanding QE asset purchases to pushing the deposit rate deeper into negative territory has been hotly debated in recent weeks and investors will be keen to learn if officials decided to opt to a soft touch or a big-splash gesture.

On balance, the markets have been well-primed for some degree of easing, so the bar for a dovish surprise will be relatively high. That means the risk of a disappointment is probably disproportionately greater relative to the alternative. In that event, disappointed deterioration in sentiment trends may pressure the Aussie lower along with other risk-geared assets.

Finally, testimony from Fed Chair Janet Yellen and November’s US jobs report will guide the perceived probability of an FOMC rate hike in December. The chance of liftoff is already placed at 77.5 percent, making it relatively difficult to engineer a hawkish surprise, but sentiment’s inconsistent response to the building likelihood of stimulus withdrawal since mid-year makes for a clouded landscape. Knee-jerk volatility seems almost certain but its directional predilections are difficult to decipher.

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:

Upcoming Government Bond Auctions

Date Time Country 

Dec 01 11:30 UK 1.5% 2021 Gilt auction

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain Auctions

Dec 03 10:50 France Auctions OATs

Dec 03 11:03 Sweden Holds I/L bond auction

Dec 04 11:03 Sweden Holds I/L bond auction