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Saturday, June 22, 2013

EUR/USD Fundamental Analysis May 29, 2013 Forecast

Analysis and Recommendations:

The EUR/USD is trading at 1.2934 flat for the day. Early in the session there was some EUR weakness that coincided with Nikkei strength and JPY weakness; however since then EUR has been quiet. Fundamental releases were not encouraging, as France released weaker than expected consumer condence at 79, the lowest level since the summer of 2008 and German import prices were notably south, falling 1.4% m/m and 3.2%y/y. The potential for the ECB to implement negative interest rates remains a focus with ECB member Noyer today suggesting that such a policy has never been implemented at a major central bank and yesterdays suggestion by the ECBs Asmussen that a discussion around negative interest rates is ongoing at the central bank and he is less open to the possibility than others.

On Monday, trading in EUR/USD developed as one could expect in the absence of most UK and US players. The calendar in Europe was empty. European equities regained some ground after the correction in the second half of last week and showed nice gains of around 1 % soon after the open. This protected the downside in EUR/USD. However there was no strong enough incentive to push equities or currencies beyond technically relevant levels. So, EUR/USD held a very tight sideways range in the 1.2930/40 area. Later in the session, European equities still gained more ground, but without impact on EUR/USD. EUR/USD closed an uneventful trading session at 1.2931, virtually unchanged.

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