Euro/USD Weekly Forecast for July 15-19

The Euro/USD currency pair changed direction and bounced back during last week. The minutes of the FOMC meeting and Bernanke’s remarks may have changed investors’ perspective regarding whether the FOMC will taper its QE3 program in 2013, which is likely to affect the strength of the USD. Will the Euro USD change direction again and fall this week? On this week’s agenda: EU CPI, Bernanke’s testimonies, German’s economic sentiment, U.S retail sales, Philly Fed survey, and U.S. jobless claims.  Here is a short overview for the Euro/USD currency pair for July 15th to July 19th

Euro/USD July Update:

The Euro to USD bounced back and rose by 1.86% during last week; the Euro/USD reached by Friday 1.3067; during July, the Euro /USD slightly increased by 0.44%.

Correlations among Currencies –July Update

The table below presents the updated linear correlation (moving correlation) among the Euro/USD and other leading currencies pairs during June and July (daily percent changes).

EURO USD Linear Correlation Currencies Pairs For June-July 2013 July 17As presented in the table above, the strong correlations among the Euro/USD and other currencies including with GBP/USD and AUD/USD suggest the changes of the Euro/USD in recent weeks could affect these currencies pairs’ directions.

See here a short outlook of gold and silver prices.

Euro/USD Weekly News Outlook (the full weekly market overview is herein)

Monday, July 15th

Tuesday, July 16th

  • 10:00 – German ZEW economic sentiment: In May the ZEW indicator for Germany slightly increased to 38.5 points; if Germany’s economic sentiment will keep rising, the Euro will plausibly strengthen the Euro;
  • 10:00 – Euro Area CPI: according to the latest update the annual CPI rose to 1.4%, which is still well below ECB’s target inflation; if the inflation will change direction and decline, it could raise the odds of ECB cutting again its cash rate;

Wednesday, July 17th

  • 15:00 – Bernanke’s Testimony: The title of Bernanke’s speech is “Semiannual Monetary Policy Report to the Congress “. Following Bernanke’s remarks from last week and the minutes of the FOMC meeting, this testimony could offer some additional information regarding the future steps of the Fed. If this testimony will change the current market expectations regarding the timing as to when will the FOMC start tapering QE3, this could affect the US dollar;

Thursday, July 18th

  • 13:30 – U.S. Jobless Claims Weekly Report:  in the last report the jobless claims bounced back by 16k to reach 344k; the next weekly report may affect the U.S dollar;
  • 15:00 – Bernanke’s Testimony: Bernanke will also testify this time before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate;
  • 15:00 – Philly Fed Manufacturing Index: In the previous survey, the growth rate rose to +12.5 in June. If the index will continue to rally, it may positively affect the U.S Dollar (the previous Philly Fed review);

Euro USD Weekly Forecast

The Euro/USD bounced back during last week mainly following the latest remarks of Bernanke and the publication of the FOMC meeting minutes. The big question for this week will be what to expect from Bernanke’s testimonies in Congress and Senate. If Bernanke’s testimonies will change again the market speculations regarding the asset purchase program as to when will the Fed start tapering it, then we could see a sharp movement in the forex and commodities markets. The developments in the EU economy could also influence Eur/USD traders including the publication of German economic sentiment and  EU CPI. If the EU economy will show signs of progress, the Euro/USD is likely to keep its upward trend. Finally, the upcoming US reports including Philly, retail sales, CPI and jobless claims could affect the Eur USD. I’m neutral as to Eur/USD.

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