Yesterday (17/8), the pair EUR/USD continues to decline and fluctuate erratically on partial impact from dollar. Ending the session, the price closed at $1.1075, down 0.35% compared with the opening price $1.1114.
The reforms that Greek Prime Minister Tsipras proposed help disburse the third bailout, the problem now is that they can fulfill it or not. The IMF has a more realistic view, after having poured money into two bailout before, if the EU does not reduce debt to Athens, Greek revival is the mission impossible. This is the disagreement between EU and the IMF.
Last Sunday, Prime Minister of German Chancellor Angela Merkel tried to reassure lawmakers that the IMF will participate in a new bailout package for Greece, ahead of the parliamentary vote, which many German lawmakers might refuse to accept bailouts.
Tomorrow (19/8) German Parliament will vote through the bailouts for Greece. Although there is a large number of opposition, there is a high chance that it will be passed through.
“Greece’s socialist PASOK party joined the main opposition on Sunday in saying it would not back Prime Minister Alexis Tsipras if he calls a confidence vote following a rebellion in the governing party over a new bailout deal.” (Reuters).
According to the latest figures published last week, Euro zone economic growth in the second quarter of 2015 not as good as expected by experts, raising concerns about the effectiveness of QE. In QII/2015, the euro zone GDP rose 0.3% compared with the first quarter and increased 1.2% compared to the same period of 2014. Meanwhile, the number expected by economists are 0.4% and 1.3% respectively.
In the long term, EUR/USD remains pressured downward by the difference in monetary policy between the 2 central banks.
While the US Federal Reserve (Fed) is expressing their confidence in the strong recovery of the economy, leading to the outlook that this institution will soon raise interest rates this year, the European Central Bank (ECB) continues to pump about 60 billion euros in easing programs each month.
Tonight there are two important news about the US housing market is Building permits and Housing starts in July. Yesterday, the index in the US housing market in August soared to a record high of 61 point, the highest in decades, according to statistics from the National Association of Home Builders (NAHB). Therefore it’s likely that tonight data are also positive, dragging Fed closer the the first rate hike this year.
Currently (1:57 pm GMT+7), EUR/USD is trading at $1.1068, down slightly compared with the opening price ($1.1075)
Forecast: The pair is still bearish. Most likely the pair today may recover to around $1.1090 and then go down to $1.1000.