EUR/USD Fundamental Analysis – December 3, 2015 – Forecast

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Updated: Dec 2, 2015, 13:41 GMT+00:00

Analysis and Recommendations: The EUR/USD tanked today after the release of disappointing inflation data. The euro is down 36 points at 1.0598 after

EUR/USD Fundamental Analysis – December 3, 2015 - Forecast

Analysis and Recommendations:

The EUR/USD tanked today after the release of disappointing inflation data. The euro is down 36 points at 1.0598 after Eurozone CPI reported at 0.1% against expectations of a rise to 0.2%. The eurozone is dangerously close to falling into deflation. This forces Mario Draghi’s hand to pull out the biggest guns possible. “It would a be a big surprise if the ECB fails to take further action in December — the key issue is just how much it will do. In the past, [ECB President Mario] Draghi has often delivered more than anticipated, which suggests that a deposit rate cut combined with a longer period of larger asset purchases is possible,” said analysts at Oxford Economics in a note sent before the inflation report.

The preliminary estimate from Eurostat showed consumer prices rose a meager 0.1% in the currency union last month, missing forecasts of a 0.2%-0.3% reading and remaining far below the European Central Bank’s inflation target of below, but close to, 2%.

Core inflation — the measure stripping out the impact of energy, food, alcohol and tobacco prices — fell to 0.9% from 1.1%. This was also below forecasts.

The weak print strengthens the case for the European Central Bank to announce more stimulus measures at its meeting on Thursday, in its battle to fight off deflation fears. Ahead of the inflation data, economists were already widely expecting the central bank to extend its asset purchases beyond Sept. 2016 and cut the deposit rate.

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.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
AUD	GDP (YoY) (Q3)	2.5%	2.4%	1.9%
AUD	GDP (QoQ) (Q3)	0.9%	0.8%	0.3%
GBP	Construction PMI (Nov)	55.3	58.2	58.8
EUR	CPI (YoY) (Nov)	0.1%	0.2%	0.1%

Upcoming Economic Events that you should be monitoring:

Thursday, December 3, 2015

Cur.	Event	Actual	Forecast	Previous
GBP	Services PMI (Nov)		55.0	54.9
EUR	Deposit Facility Rate (Dec)		-0.30%	-0.20%
EUR	Interest Rate Decision (Dec)		0.05%	0.05%
EUR	ECB Press Conference
USD	Fed Chair Yellen Testifies
USD	ISM Non-Manufacturing PMI (Nov)		58.0	59.1