EUR/USD Fundamental Analysis – Forecast for the week of September 19, 2016

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Published: Sep 17, 2016, 06:59 UTC

The EUR/USD ended the week with a loss of just under 1% as the greenback continued to rally. The dollar is up as we count down days to the FOMC meeting.

The EUR/USD ended the week with a loss of just under 1% as the greenback continued to rally. The dollar is up as we count down days to the FOMC meeting. The euro is also troubled by the DOJ settlement offer to Deutsche Bank for 14 billion US dollar. The euro will open the new week at 1.1155 and will remain neutral this week ahead of the big events.

Weaker stocks are weighing on the EUR somewhat but the market is respecting recent ranges. Despite a run of mostly better than expected data this week, the GBP is under-performing on the session and heading for a soft close on the week. While data suggest that the immediate aftermath of the Brexit decision has not been too painful for the UK economy, the BoE’s cautious outlook, leaving the door wide open for more policy easing, has perhaps prompted investors to take a long view of the process.

The market has eased modestly from the mid 1.12 area through European trading as local bank stocks wilted. The euro seems more immune to the challenges of the local banking sector at the moment. We think spot still looks “rich” relative to fair value, based on Eurozone/US spreads and equity returns; major model suggests equilibrium based on these variables is a little under 1.06 currently

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This Week’s Economic Events That You Should Be Monitoring:

Date	Country	Name	Volatility	Previous
9/20/2016	AUD	RBA Meeting’s Minutes	3
9/20/2016	CAD	BoC Governor Poloz	3
9/21/2016	AUD	Mid-Year Economic Outlook	3
9/21/2016	JPY	BoJ Interest Rate Decision	3	-0.1
9/21/2016	JPY	BoJ Monetary Policy Statement	3
9/21/2016	JPY	BoJ Press Conference	3
9/21/2016	USD	FOMC Economic Projections	3
9/21/2016	USD	Fed’s Monetary Policy Statement	3
9/21/2016	USD	Fed Interest Rate Decision	3	0.5
9/21/2016	USD	FOMC Press conference	3
9/21/2016	NZD	RBNZ Interest Rate Decision	3	2
9/22/2016	EUR	ECB President Draghi’s Speech	3
9/23/2016	AUD	RBA’s Governor Lowe Speech	3