EUR/USD Fundamental Forecast – April 27, 2016

The EUR/USD added 16 points to trade at 1.1284 as the greenback continued to decline ahead of the FOMC statement due tomorrow. The euro has been a bit unstable as no one can really interpret Mario Draghi. The currency remains in a fairly tight range. The euro’s rally began shortly after the central bank announced that it would leave interest rates and monetary policy on hold, but it stalled as Draghi largely reiterated previous talking points, giving investors little incentive to continue pushing the currency higher.

Draghi stressed that the central bank’s easing efforts were helping to boost lending and support growth in the eurozone, and that the central bank expects inflation to pick up in the second half of 2016.

He also appeared to back away from a comment, made during the March meeting, that the central bank wouldn’t push interest rates further into negative territory, saying the ECB would be “ready to act” should financial conditions tighten.

Monday opened with the Euro dropping by around -40 pips briefly in response to further dovishness from the European Central Bank (ECB).

Governing council member Ewald Nowotny spoke about negative interest rates and defended the central bank from German finance critics in an Austrian newspaper interview published on Saturday. Reuters reports on the piece;

“You have to discuss negative rates in a broad context,” the head of the Austrian central bank was quoted as saying by the newspaper Der Standard on Saturday.

They are part of the central bank’s efforts to stabilize Europe’s economic situation after a severe crisis, he said. “Now it is all about preventing Europe from dropping into deflation.”

He said that he would welcome it if interest rates could be raised again “the sooner the better”, but that the conditions must be right.

“This will happen as soon as the economy is doing better, business activity picks up and inflation gets higher.”

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Upcoming Economic Events that you should be monitoring:

Wednesday, April 27, 2016

Government Bond Auctions

Date Time       Country           Auction

Apr 26 11:10 Italy Holds BTP€i auction

Apr 26 19:00 US Holds 2-year note auction

Apr 27 11:03 Sweden Holds bond auction

Apr 27 11:10 Italy Holds CTZ auction

Apr 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Apr 27 19:00 US 2-year FRN, 5-year note auctions

Apr 28 11:10 Italy Holds 5yr/10yr bond auctions

Apr 28 19:00 US Holds 7-year note auction