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EUR/USD Breaks Down After Two Days of Stability

May 24, 2016 by

EUR/USD broke to the downside today after two days of small gains. The major factor that helped the dollar to outperform the euro was the outlook for a June interest rate hike from the Federal Reserve. Macroeconomic data also played its part as the US housing report was superb while the economic sentiment indicators for Germany and the whole eurozone were far below expectations. (Event A on the chart.) Granted, the US manufacturing sector did not look healthy, but markets paid little attention to that part of the data.

Richmond Fed manufacturing index dropped sharply from 14 to -1 in May, far below the predicted value of 9. (Event B on the chart.)

New home sales were at the seasonally adjusted annual rate of 619k in April, up from the positively revised March rate of 531k (511k). Analysts have totally missed with their forecast of a fall to 521k. (Event B on the chart.)

EUR/USD as of 2016-05-24

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