EUR/USD Weekly Fundamental Analysis, October 20-24, 2014 Forecast

Weekly Analysis and Recommendation:

The EUR/USD tumbled late in the trading day on Friday after touching above the 1.28 level to close the week at 1.2760 on comments from ECB bank members. The European Central Bank has recently taken additional easing steps to help reverse the region’s deflationary economic tendencies. These include cutting interest rates, extending low-cost loans to financial institutions in return for credit to companies, and purchasing corporate debt which, along with a weaker euro, should provide increased support to the beleaguered region. The ECB President also favors fiscal adjustments to complement monetary actions — structural economic and labour market reforms that would allow for the implementation of a more competitive tax regime and pave the way for increased job creation, and hinted that a broader bond-buying program could be in the cards if needed. Expectations that interest rates will continue to rise in response to the strengthening trend in U.S. output growth has put increased upward pressure on the U.S. dollar. So has the developing monetary policy differential between the leading U.S. economy and the lagging economies in the euro zone and Japan. Against a basket of international currencies, the U.S. dollar has strengthened by almost 7% since mid-year.

US Federal Reserve Chief Janet Yellen says she is greatly concerned over the widening gap between the rich and poor in the United States. Speaking in the US city of Boston on Friday, Ms. Yellen said “income and wealth inequality are near their highest levels in the past hundred years” and have widened during the economic recovery. In her speech at a conference on inequality, the Fed chair did not mention monetary policy or the current turmoil in financial markets. She noted the wealth gap has grown steadily over the past several decades, despite a brief pause during the 2008 crisis when the richest Americans lost money and increased government spending helped offset losses for the less wealthy.

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.

Historical: From 2011 to Present

Highest: 1.4577 USD on Jul 03, 2011

Average: 1.3165 USD over this period.

Lowest: 1.2041 USD on Jul 24, 2012

 

Economic Highlights of the coming week:

Upcoming Government Bond Auctions

Date Time Country 

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