During the session last Friday (16/10), the pair EUR/USD continued to decline due to the negative figures of the Euro zone and the US economy. Ending the session, the price closed at $1.13518, down 0.3% compared with the opening price $1.13841.
Data last week showed that inflation in the euro zone in September at -0.1%, while core inflation (excluding food and energy) remained at 0.9%. Negative inflation and weak growth raises doubts about the effectiveness of QE package. However, the president of the European Central Bank (ECB) Mario Draghi also expressed optimism about the effects of the economic stimulus program, said that QE package works better than initial expectations, and ECB will be ready to open QE if needed. The speculation surrounding this possibility exacerbated the downward pressure on the Euro.
In the US, industrial output was down 0.2% in September. While US industrial production accounts for about 10% of GDP, but more negative figures predicted also showed that the heath of US economy is being affected by slowing growth in China, reducing expectations the US Federal Reserve raised interest rates this year.
Investment funds in the United States as well as people are increasingly buying Treasury bonds, especially bonds for 30 years, shows that the market’s expectations of inflation will remain below the 2% target in the next decade. So, expectation that the Fed raise interest rates this year also dropped significantly. Us dollar going down supported the pair to go up.
This week, the pair will be in the waiting for speeches by Fed officials today and tomorrow, especially Ms. Yellen’s speech, as well as the ECB press conference on Thursday, and the economic data of the two regions.
In the long term, the pair EUR/USD remained under downward pressure at the prospect of the Fed raising interest rates and the possibility of ECB enhanced QE package.
Today two Fed president Lacker and Brainard will give speeches. But maybe the market will not exceed expectations on clues from the Fed, as the spokesman of the authorities have no clear indication of when the Fed raise interest rates. Optimistic speaking on US economic could cause the pair to go down today.
Currently, at 2:17 pm GMT+7, the pair is trading at $1.13534, down of 0.01% compared with the opening price at $1.13541.
Forecast: EUR/USD is still bearish. Today, the pair will be affected by statements from Fed officials, however, predicted volatility would not be too strong. The pair is predicted to decline, reaching $1.13000. However, it can not exclude the possibility that the pair could climb up to $ 1.14000.