2016-07-27 14:37:48

Since the opening of today’s session the pair EUR/USD has slightly grown reaching the level of 1.1000 due to the positive German and Italian macro-economic statistics. It became known that German consumer confidence index was at the level of 10.0 in August (against the forecast of 9.9 and 10.1 in July). Italian consumer price index in July is at the level of 111.3 (against the forecast of 109.2 and 110.2 in June). Note that the indices rose after Brexit.

Today at 20:00 (GMT+2) interest rate decision by the US Fed will become known It is likely that the rate will be left unchanged. American positive macro-economic statistics and the easing concerns about Brexit, make investors believe that the Fed will raise interest rates this year.

Futures for the Fed funds rate shows 20% probability of the rate hike in September against 12% possibility this month. Despite economic uncertainty in the country’s economy over the past few months, probability of the increase in rate in December is about 50%.

Minutes of the US Fed previous meetings demonstrated that the Fed representatives have not reached common opinion about the state of the national economy and the necessity of the interest rate increase in the country.

If US Fed casts a hint that interest rates can be raised in September, the USD will rise in the market.

Recent European macro-economic indicators are in general negative. Composite index of purchasing managers (PMI) in the Eurozone for July, which was released last week, fell to 52.9 against 53.1 in June, reaching the 18-month lows.

Current account balance of Eurozone fell to 30.8 billion euro (34.0 billion USD) in May against 36.7 billion euro in April.

European economic prospects have significantly deteriorated after Brexit. Due to the differences between the monetary policies of the ECB and the US Fed, the decline the EUR/USD is likely to continue in the medium term.

EUR/USD: Interest rate decision by the US Fed.  Fundamental analysis for 27.07.2016