The euro at risk on the data flow and the comments of the ECB, the vote on the Brexit could be right

EURO FUNDAMENTAL FORECASTS: NEUTRAL

• The euro abandons post-FOMC gains following the PMI survey's survey summary
• Incoming data flows, comments from the ECB could strengthen the accommodative vision
• Another House of Commons Vote on Brexit May Cause Volatility

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An upsurge in sawtooth volatility finally resulted in a loss of the euro last week. The currency surged on Wednesday as a dubious and unexpected policy announcement by the Fed resulted in a sharp surge against the benchmark EUR / USD exchange rate. The tracking was not in the cards however, with the corrective removal that has turned into outright sales thanks to the dismal PMI data.

DATA FLOWS, ECB COMMENTS CAN THINK ON EURO

The coming week offers many possibilities for price fluctuations based on the data. The German IFO survey on business confidence and CPI updates from the three largest economies in the euro area are listening. Negative surprises echoing the general trend in the news flow underestimating the baseline forecasts over the last few months could lead to a radical change in the ECB's policy choices, which would weigh on the single currency.

A series of scheduled speeches by central bankers – including Mario Draghi, president of the ECB – could reinforce the sales pressure related to policies. In the current state of affairs, a new series of LTRO has been unveiled and interest rate increases have been delayed by at least 2019. Sellers could be encouraged by terms implying that even greater accommodation could be caused by growth.

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ANOTHER VOTE BREXIT THREATENS VOLATILITY

On the external level, the next chapter of the chaotic Brexit saga is probably the most powerful catalyst. Parliament will again be asked to vote on a version of the withdrawal bill supported by British Prime Minister Theresa May. Two previous projects suffered a crushing defeat. If it succeeds, the "day of release" will be postponed to May 22nd. Otherwise, the new deadline will be April 12th.

The House of Commons has already expressed disgust for a Brexit "without agreement". If Mrs May still fails, the government will probably ask for a longer term extension and a plan for the UK to take part in the next elections to the European Parliament. This could raise the euro against most of its major counterparts (perhaps excluding the pound itself) in that it would further delay the 'point of no return'.

— Written by Ilya Spivak, Senior Currency Strategist for DailyFX.com

At contact Ilya, use the comments section below or @IlyaSpivakon Twitter

RESOURCES FOR EXCHANGES IN AMERICAN DOLLARS

OTHER FUNDAMENTAL FORECASTS:

Australian dollar forecast – Australian dollar likely to be the loser in an ugly contest with his American cousin

Pound Sterling Forecast – Fundamental GBP Forecast: And the Brexit Band Played

US Dollar Forecasts – Post-FOMC Recovery in US Dollars Should Face Slower GDP Report

Gold Forecast – Gold prices are clouded by recessionary signals and US Econ data down