Fundamental analysis.
Yesterday, EUR/USD has tested $1,4245 level that is maximum level from the beginning of year.
Highly remunerative currencies, including euro, have been supported by positive news from China. So, the industrial production index of China in May remained above 50 points indicating economic activity increase. Industrial production indexes of the Eurozone and Great Britain in May remained below 50 points but dynamics of their change was positive and has surpassed analysts’ expectations.
Industrial index ISM (USA) has risen to level 42,8 from 40,1 in April. However in the USA there is a problem of a huge public debt which puts pressure upon dollar.
Nevertheless, in view of EUR/USD strong growth which in May has grown by 6,7 % (from the beginning of March euro has risen by 12%!), analysts of the largest European banks (Deutsche Bank, UBS and Barclays Capital) recommend to sell euro. FBS experts don’t exclude that within three months euro can fall to $1,30 level.
Pressure upon euro can amplify on the threshold of ECB session on which the destiny of the key interest rate will dare. Rememeber that ECB does not exclude interest rate decrease below 1%. It will lead to euro exchange rate drop. ECB session will take place on June, 4th.
Today the following block of macroeconomic statistics is expected:
1/ Unemployment rate in the Eurozone for April (previous value – 8,9%, forecast – 9,1%).
2/ Pending Home Sales Index in USA for April.