EUR/USD Fundamental Analysis December 31, 2014 Forecast

Analysis and Recommendations:

The EUR/USD added 9 points to trade at 1.2164 with little data and no news flow the pair gained as the US dollar gave back some of Monday’s gains. The pair fell to a 2 year low on Monday as the situation in Greek political situation came to a boil. “Grexit” fears have returned to the market.

The Telegraph reports that the dollar will continue to strengthen in 2015, pushing it close to parity with the euro for the first time in more than a decade, experts believe.

Data last week showed the US economy grew at an annual pace of 5pc in the third quarter. Experts said the recovery would continue, preparing the ground for the US Federal Reserve to raise interest rates.

Economists at Citibank said a combination of tighter monetary policy in the US and the prospect of more loosening in the Eurozone meant the single currency was on its way to parity with the dollar. Citibank has forecast that one euro will only be worth $1.10 by next September, from around $1.22 today. It expects the euro to fall below parity to $0.99 in 2016 for the first time since December 2002.

The decision of the International Monetary Fund (IMF) to suspend the provision of financial assistance to Greece until a new government is formed, after the general elections of January 25, was revealed by the Fund’s Director of the Communications Department, Jerry Rice, only a few hours after the failure of the election of a new President of the Hellenic Republic by the Greek Parliament.

“Greece has made huge progress since 2009. We must have more respect for the country,” said the German Finance Minister. “We will continue to assist Greece while it deals with the hard reforms,” he added, noting that the country’s debt situation will not change in the case of snap elections. “The upcoming elections will not change the Greek debt. Each new government must respect the agreements made by its predecessors,” he repeated.

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 actual vs. forecast:

There was Asian data today and limited data from the Eurozone

 

Upcoming Economic Events that you should be monitoring:

Wednesday, December 31^st.

Government Bond Auction

Date Time Country Auction

None