EUR/USD Weekly Fundamental Analysis – Week of May 23, 2016

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Updated: May 21, 2016, 07:19 UTC

The EUR/USD dipped 0.75% this week to trade at 1.1223 as the greenback climbed and Greek debt moved back into focus and low inflation data weighed heavily

The EUR/USD dipped 0.75% this week to trade at 1.1223 as the greenback climbed and Greek debt moved back into focus and low inflation data weighed heavily on the shared currency. On Tuesday, Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams — a voting member — suggested that a June rate hike couldn’t be ruled out. Then, on Thursday, Richmond Fed president Jeffrey Lacker indicated that he would be comfortable with four more rate hikes this year.

The hawkish Fed speak, coupled with Wednesday’s release of the April FOMC minutes, suggesting that a June rate hike is on the table if the economic data aligns sent the US dollar on a rally. The marketplace was still digesting the minutes of the latest Federal Open Market Committee (FOMC) meeting. The minutes said FOMC members will raise U.S. interest rates in June if second-quarter U.S. economic growth continues on a sound track, which is what the FOMC expects to happen. Thus, unless there is some seriously downbeat economic data released in the next few weeks, there will be another Fed rate hike in June. The FOMC minutes were deemed hawkish on U.S. monetary policy and were a bit of a surprise to most.

In the absence of a catalyst to drive prices, the EUR/USD was seen spending most of the week near 1.1226 resistance, in a low momentum move, unable to break higher. The pair touched the same level during Fed member Dudley’s speech, and saw a sharp 30 pip rejection lower to 1.1195 to end out New York trading. The pair’s ability to maintain lows at 1.1195 will provide conviction in a continuation of what can be perceived as a correction in trend at this point.

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Major Economic Events for the week:


	Cur.	Event	Actual	Forecast	Previous
Monday, May 23, 2016
		Canada – Victoria Day
Tuesday, May 24, 2016
	USD	New Home Sales (Apr)		523K	511K
Wednesday, May 25, 2016
	CAD	Interest Rate Decision		0.50%	0.50%
	USD	Crude Oil Inventories			1.310M
Thursday, May 26, 2016
	GBP	GDP (QoQ) (Q1)		0.4%	0.4%
	GBP	GDP (YoY) (Q1)		2.1%	2.1%
	USD	Core Durable Goods Orders (MoM) (Apr)		0.3%	-0.2%
	USD	Pending Home Sales (MoM) (Apr)		0.6%	1.4%
Friday, May 27, 2016
	USD	GDP (QoQ) (Q1)		0.9%	0.5%