EUR/USD Fundamental Analysis October 17, 2014 Forecast

Analysis and Recommendations:

The EUR/USD reversed yesterday’s rise to trade at 1.2753 down by 82 points. Investors are continuing to build long positions in the U.S. dollar, shrugging their shoulders over the reversal seen this week in the greenback’s months long rally. Buying the dollar has been a consensus call at investment meetings for some time now. Until a few weeks ago building dollar positions was mostly done by selling the euro, but this dollar euphoria has now extended to all G-10 currencies, with a focus on commodity currencies.

The euro tumbled as a rout in bonds from the region’s periphery boosted bets the European Central Bank will expand stimulus that tends to lower exchange rates in order to quell the turmoil.

The dollar advanced against most of its 31 major peers as applications for unemployment benefits in the U.S. dropped. It plunged yesterday when a drop in retail sales prompted traders to cut bets the Federal Reserve will increase borrowing costs.

“The data that sparked the move was weaker than expected but overall data-wise, and as far as the growth outlook is concerned, the U.S. looks more favorable than elsewhere,” Ian Stannard, the London-based head of European foreign-exchange strategy at Morgan Stanley said, referring to the decline in the dollar yesterday. “We believe the overall dollar-positive trend is still very much in place. This should provide some renewed buying opportunities.”

Jobless claims decreased by 23,000 to 264,000 in the week ended Oct. 11, the fewest since April 2000 and lower than any projection in the Bloomberg survey of economists, a Labor Department report showed today. Morgan Stanley predicts the U.S. currency will appreciate to $1.24 per euro by the end of this year, Stannard said.

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:

 

Upcoming Economic Events that you should be monitoring:

Government Bond Auction

Date Time Country Auction

Oct 20 12:00 Belgium OLO Auction

Oct 20 12:00 Slovakia Bond auction (for decision)

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29