EUR/USD Fundamental Analysis October 20, 2014 Forecast

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Updated: Aug 25, 2015, 01:00 UTC

Analysis and Recommendations: The EUR/USD added 9 points to trade at 1.2817 as the US dollar eased ahead of a slew of housing data and Janet Yellen’s

EUR/USD Fundamental Analysis October 20, 2014 Forecast

Analysis and Recommendations:

The EUR/USD added 9 points to trade at 1.2817 as the US dollar eased ahead of a slew of housing data and Janet Yellen’s speech. Yesterday the dollar climbed versus a majority of its major peers with growth in the U.S. forecast to outpace Europe and Japan, and on speculation the worst slump against the yen in 15 months yesterday was overdone. The Australian dollar and Brazilian real declined the most against the greenback after Federal Reserve Bank of St. Louis President James Bullard said U.S. economic fundamentals remain strong, sending bond yields higher. The euro fell as concern increased that a financial crisis.

Doubts regarding another relapse in the euro area have led its top monetary authority to make a move and implement an extensive package of unconventional monetary stimuli. The ECB hopes to revive growth in credit as the lynchpin to consolidating the economic recovery, reducing unemployment and, ultimately, normalizing inflation. the European Central Bank faced growing pressure from various governments, the mainstream academics and the International Monetary Fund to embark on a large scale government bond buying program. And all year, the European Central Bank resisted, arguing repeatedly that quantitative easing would yield little benefit in the Eurozone’s structurally challenged economy. Furthermore, Mr. Draghi also warned of the political and moral hazard that would arise as a result of exposing the European Central Bank’s balance-sheet directly to sovereign credit risk.

Yet last month, Mr. Draghi threw those concerns aside, pushing through a decision by the bank’s governing council to cut interest rates and to embark on a program of large-scale bond purchases.

For now, although the European Central Bank will buy only asset-backed securities and covered bonds, the market may soon realize that a taboo has been broken. Put simply, Mr. Draghi’s objective of restoring the European Central Bank’s balance sheet to its size as of early 2012 will equate to a possible US$1.26 trillion expansion and show that the central bank has shifted its focus to money-creation.

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 are no data releases scheduled Friday in Asian or European markets, focus will be on Janet Yellen’s speech later today

Cur.	Event	Actual	Forecast	Previous
USD	Building Permits (Sep)		1.029M	1.003M
USD	Building Permits (MoM)		2.8%	-5.1%
USD	Fed Chair Yellen Speaks
USD	Housing Starts (MoM)		4.8%	-14.4%
USD	Housing Starts (Sep)		1.004M	0.956