EUR/USD Fundamental Analysis – July 4-8, 2016 – Forecast

EUR/USD 7 Day Forecast

The EUR/USD is stuck in the 1.11 range even with better than expected data this week. The Eurozone inflation data printed to the upside. The pair saw a gain of 0.9% but is down 2% for the month.  The euro is unchanged on Friday, as EUR/USD continues to hug the 1.11 line. It’s an unusually busy Friday, so the markets will have plenty of economic data to digest from the Eurozone and the US. In the Eurozone, German and Eurozone Manufacturing PMI reports met expectations, as both indicators pointed to expansion in the manufacturing sector. Over in the US, today’s highlight is ISM Manufacturing PMI. The indicator is expected to remain unchanged at 51.3 points.

With the financial markets understandably focused on the stunning Brexit vote, the Federal Reserve and future monetary moves have shifted to the back-burner. That could change next week, as Fed Chair Janet Yellen will deliver a speech in Philadelphia.

Analysts said the prospect of a U.S. Federal Reserve rate increase by the end of the year was likely off the table, removing a key pillar of support for the dollar.

“The dollar’s weak not because rate hikes have dimmed, but rather because the Fed has turned off the lights and walked out of the room,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.

Gaffney of EverBank said a Reuters report on Friday saying the European Central Bank was not considering buying government debt out of proportion to euro zone countries’ shareholding in the bank also helped the euro gain against the dollar.

The euro had fallen sharply on Thursday, along with European bond yields, on a Bloomberg report that the ECB had been considering giving up the capital key due to a shortage of German paper, which investors see as safe and have piled into in the aftermath of Britain’s vote to leave the EU.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.