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Forex - EUR/USD weekly outlook: June 13-17

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Forex Pros - The euro slumped to a six-day low against the U.S. dollar on Friday, posting the fist weekly decline in a month as lingering concerns over Greece's sovereign debt crisis and reduced expectations for euro zone rate hikes weighed on the single currency.

EUR/USD hit 1.4321 on Friday, the lowest since June 2; the pair subsequently consolidated at 1.4345 by close of trade on Friday, tumbling 1.8% over the week.

The pair is likely to find support at 1.4276, the low of May 31 and resistance at 1.4649, Thursday's high.

The single currency came under pressure amid mounting uncertainty over a resolution to Greece's ongoing debt crisis. Germany's Finance Minister Wolfgang Schaeuble said that private investors should contribute to a second bailout, even as the European Central Bank was opposed to any form of debt restructuring.

The cost of insuring Spanish, Portuguese and Ireland debt all traded higher, while bonds issued by the euro zone's most debt-laden economies came under pressure.

Reduced rate expectations also hurt the euro. Speaking after the ECB kept interest rates on hold at 1.25%, President Jean-Claude Trichet said "strong vigilance" on inflation was warranted, indicating a rate hike in July that was already prices in by investors.

However, the central bank kept its 2012 inflation forecast unchanged, suggesting the pace of euro zone interest-rate hikes may be slower than previously thought.

The ECB said inflation next year will accelerate between 1.1% and 2.3%, compared with an earlier forecast of 1% to 2.4%.

Looking ahead to the coming week, U.S. data on retail sales and consumer price inflation will be a focus of attention. Meanwhile, the euro zone is also to produce data on consumer prices.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, June 13

Italy is to publish a report on industrial production, while ECB President Trichet is to speak at a public engagement; his comments will be closely watched for any clues to the possible future direction of monetary policy.

Also Monday, markets in France and Germany are to remain closed in observance of Whit Monday.

Meanwhile, in the U.S., Federal Reserve Bank of Dallas President Richard Fisher is to speak in Dallas.

Tuesday, June 14

The U.S. is to produce official data on producer price inflation, a leading indicator of consumer inflation. The country is also due to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity

Wednesday, June 15

The euro zone is to publish official data on industrial production, a leading indicator of economic health. Also Wednesday, France is to publish data on consumer price inflation.

Meanwhile, the U.S. is to release a flurry of data, including reports on consumer price inflation, industrial production and the capacity utilization rate, leading indicators of economic health.

The U.S. is also to publish government data on the balance of domestic and foreign investment as well as official data on crude oil inventories and manufacturing activity in New York state.

Thursday, June 16

The euro zone is to publish official data on consumer price inflation. Meanwhile, the ECB is to publish its monthly bulletin, which reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision.

Later in the day, the U.S. is to publish its weekly report on initial jobless claims as well as official data on building permits and housing starts, an excellent gauge of future construction activity. The country is also to produce data on its current account and natural gas stockpiles, while the Federal Reserve Bank of Philadelphia is to publish an index of manufacturing activity.

Friday, June 17

Both Italy and the euro zone are to publish official data on their respective trade balances, while ECB President Trichet is due to speak at a public engagement in New York.

The U.S. is to round up the week with a report on an index of leading indicators, which is designed to predict the direction of the economy, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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