EUR/USD Daily Fundamental Analysis for August 10, 2011

The mixed sentiment and choppy trading prevailed for the EUR/USD with the focus predominantly on the Feds decision as the euro moved higher most of Tuesday ahead of the decision.

Investors focused on the fragile sentiment and worsening outlook for financial stability and growth which fueled speculations that the FOMC will likely take action to stem the crisis and the worsening state of confidence.

On Wednesday, the market movement is bound to be a reaction to the late Tuesday decision from the Federal Reserve and if the fed did not ease the jitters and stabilize markets, the strong selloff will return to control the market in a new pressure on policy makers for more coordinated efforts to control the crisis that echoes the starting days of the financial crisis.

As we said, the aftermath of the FOMC will remain the focus and eyes will also be on the performance across equity and bond markets for signs of stability to help the euro sustain the gains and otherwise the bearishness will return obviously on the pair.

In other data, Germany will release the final estimate for the July consumer price index which is expected unrevised at 0.4% rise on the month and 2.4% on the year and in EU harmonized terms also to remain unrevised with 0.5% monthly gain and 2.6% on the year.

From the U.S. the wholesale inventories index for June is due at 14:00 GMT and expected to ease to 1.0% following 1.8%.

At 18:00 GMT the Monthly Budget Statement for July is due with the deficit expected to widen to $140.0 billion from $43.1 billion.

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