Euro/USD Weekly Forecast for July 22-26

The Euro USD continued its upwards trend even though the U.S reports showed signs of growth: Housing starts declined by 9.9% during June compared to May; Philly Fed index also rose to 19.8 in July; U.S jobless claims fell by 24k to 334k; Retail sales slightly increased by 0.6% during June.  Bernanke’s testimony reminded that the Fed won’t taper QE3 until the U.S economy will show clear signs of progress. This news, however, didn’t stir up the forex markets. By the end of last week, leading currencies including Euro, Japanese yen and Aussie dollar rose again against the USD. Will the Euro US dollar continue to rise this week?

The Japanese elections started off the week as Abe’s Liberal Democratic Party is set to win. This news could affect the Japanese yen and consequently other leading currencies. On this week’s agenda: EU monetary developments, U.S housing starts, EU manufacturing PMI, U.S existing home sales, and U.S. jobless claims.  Here is a short overview for the Euro/USD currency pair for July 22nd to July 26th.

Euro/USD July Update:

The Euro to USD slightly rose again by 0.58% during last week; the Euro/USD reached by Friday 1.3143; during July, the Euro /USD slightly increased by 1.35%.

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 23

As seen in the table above, the strong correlations among the Euro/USD and other currencies including with GBP/USD and AUD/USD implies the shifts 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 22nd

  • 15:00 – U.S. Existing Home Sales: in the latest report regarding May 2013 the number of homes sold rose to a seasonally adjusted annual rate of 5.18 million houses; if this trend will change course, it might pressure down the U.S dollar;

Tuesday, July 23rd

  • 15:00 – EU Consumer Sentiment: This is a survey of the changes in the EU consumer sentiment;

Wednesday, July 24th

  • 09:00 – Flash Euro Zone Manufacturing PMI: This report serves as an indicator to the economic changes of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD;
  • 15:00 – U.S. New Home Sales: in the previous report (opens pdf; for May), the sales of new homes slightly rose to an annual rate of 476,000 – a 4.8% rise; this news may also affect the US dollar;

Thursday, July 25th

  • 09:00 – Euro Area Monetary Development: In the previous May report, the annual growth rate for M3 slipped to 2.9%; M1 decreased to 8.4%. Finally, the annual growth rate of loans to private sector reached -0.7%. This news suggests the EU inflation isn’t rising as loans continue to dwindle and the growth rate of M1 and M3 inch down. The progress of the EU monetary base is likely to affect the ECB rate decisions in the coming months;
  • 13:30 – U.S. Jobless Claims:  in the recent report the jobless claims declined by 24k to reach 334k; the next weekly report may affect the U.S dollar;

Friday, July 26th

  •  14:55 – UoM Consumer Sentiment (revised):University of Michigan will come out with its revised consumer sentiment monthly update; this survey could offer an insight to recent developments in U.S consumers’ sentiment; based on the recent report, the sentiment index slipped to 84.1; 

Euro USD Weekly Outlook

The Euro/USD slightly rose again during last week despite the positive U.S reports that showed growth in the U.S economy. The upcoming U.S reports including on the housing market could affect the U.S dollar. If the data won’t show growth, they could pull further down the US dollar, which means the Euro USD pair could continue to rise. The upcoming EU reports including the manufacturing PMI and EU monetary development might not show progress for the EU economy and thus could curb the rally of Euro USD. I’m still neutral as to Eur/USD.

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