EUR/USD Fundamental Analysis April 14, 2014 Forecast

Analysis and Recommendations:

The EUR/USD eased by 11 points unable to climb above the 1.39 level. The EUR is flat to yesterday’s close, having failed to sustain a brief rally above 1.3900. Several periphery yields have dropped to new lows—note that both Italian and Spanish 10‐years are now at 3.2%. German CPI came in as expected with headline falling from 1.2% in February to 1.0%y/y in March; the softness was expected but still marks a three‐year low in German headline inflation and will weigh on Eurozone inflation, which in turn will weigh on the ECB. Today an outlook upgrade for Portugal (Fitch to positive) was offset by an outlook downgrade to Finland (S&P to negative on growth concerns).  Next week’s focus will be the release of Eurozone CPI, expected to raise 0.5%y/y on headline.

Disappointing earnings releases shifted markets into the open, driving a bout of risk aversion and USD strength. Beyond that markets had been relaƟvely quiet into the weekend. Today there is only PPI and preliminary University of Michigan confidence with no Fed speakers.

The single currency is at it again. Far from weakening on the expected widening in interest rate differentials between the Eurozone and the US on Thursday it snapped back towards the 1.3900 mark, which it finally managed to hit on Friday morning. On Wednesday, traders were surprised by the ‘dovish’ slant to the latest set of FOMC minutes Stateside. Specifically, many economists referenced the following Bloomberg headline in their reports: “Fed officials said forecasts overstated rate rise pace.”

That puts the European Central Bank (ECB) in a bind given the worries which already exist in some corners regarding the risk of inflation remaining too low for too long in the single currency area.

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 up to the data analysis and information in our weekly reports.

Economic Data April 11, 2014 actual v. forecast

 

Upcoming Economic Events that affect the EUR, GBP, CAD and USD

Government Bond Auction

Date Time Country 

Apr 14 09:30 Germany

Apr 15 09:30 Belgium

Apr 15 14:30 UK

Apr 16 09:03 Sweden

Apr 16 09:30 Germany

Apr 17 09:00 Slovakia

Apr 17 15:00 US

Apr 17 15:30 Italy

Apr 17 17:00 US