EUR/USD Monthly Fundamental Forecast March 2013

Outlook and Recommendation

The EUR/USD remains weak trading at 1.3082 on a negative bias. The euro had a strong start to 2013; however this has faded, and the currency is entering March down 1% year-to-date. Europeans appear to be moving towards a phase of rejecting reforms in favor of uncertainty; budgetary deficits are making slow progress and there has been an easing in EUR supportive flows. In addition, the technical outlook for EUR is bearish, as the strong upward July to January trend line has been broken.

Global growth dynamics, renewed Italy-centered volatility in Europe, persistent risk re-pricing within the universe of major currencies, ongoing intervention by central banks around the world and credit differentiation amongst emerging-market economies are some of the key drivers of capital flows in foreign exchange markets. The USD regained an appreciating bias against all peers supported by improving domestic demand, industrial production impetus and encouraging housing market activity.

The USD is in demand. Improved US economic conditions, coupled with a bullish trend in equity markets amidst prolonged weakness in the Eurozone, is a major driver of flows to the USD. Government-related fiscal retrenchment will weigh on growth prospects moderately throughout the year, yet improving housing market conditions and auto industry activity will partly offset some of this restraint, pushing economic growth higher from the later part of the year well into 2014. Improving industrial production prospects coupled with a competitive exchange rate will also reinforce this US recovery phase. The US still needs to address serious structural fiscal issues

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank: FED and ECB

Central Bank – Fed Reserve

Date of next meeting or last meeting: March 20, 2013

Current Rate: 0.00 – 0.25%

Central Bank Name –European Central Bank

Date of next meeting or last meeting: March 07, 2013

Current Rate: 0.75%

Economic events for the month of February affecting EUR, CHF, GBP and USD