Update
The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.19% on Monday morning.
With geopolitical tensions in Greece still weighing heavily on investor confidence, the Euro is generally holding steady despite reasonably positive German imports data. The lack of movement can also be linked to traders awaiting the European Central Bank’s asset purchase announcement. Although very few expect any significant changes to the quantitative easing program, some feel that its success at this early stage warrants a reduction in bond-buying.
The US Dollar, meanwhile, edged higher versus many of its major peers ahead of the Services and Composite PMIs. If recent data results are anything to go by, however, there is a high possibility that the ‘Greenback’ (USD) will dive if the data prints unfavourably.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0849.
At the close of last week, the Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.45%.
After Friday’s Eurogroup meeting in Riga, and the following press conference, showed just how far Greece has to go to be awarder vital bailout funds; the shared currency slumped versus the majority of its most traded currency rivals. Eurozone officials have been more forceful than usual, warning that Greece has very little time left to produce acceptable reforms.
The US Dollar softened considerably over the past week thanks to a succession of disappointing domestic data results. Of particular disappointment has been labour market data, one of the Federal Open Market Committee (FOMC) focuses for benchmark rate hikes. The string of poor results has led futures traders to pare bets as to the timing of a rate hike, with some delaying hike expectations to 2016.
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.0871 at the close of last week.
Euro (EUR) Exchange Rate Forecast to Soften
With geopolitical tensions dominating trader focus, the Euro is likely to soften over the course of the following week. This is especially true given that it is very unlikely that Greece will be able to produce a detailed program of reforms in such a short time.
With the fractious relationship between Greece and Eurozone officials the main cause of Euro volatility, domestic data is unlikely to be particularly impactful. With that being said, however, there will be several influential data publications with the potential to provoke shared currency movement.
Of all the data publications; German Consumer Price Index, EU Harmonised German CPI, German Unemployment Rate, German Unemployment Change, Eurozone Estimate CPI and Eurozone Core CPI will be of most significance in terms of the potential to initiate changes.
European Commission Economic Forecasts, German Retail Sales, German Consumer Confidence, European Central Bank (ECB) Economic Bulletin and Eurozone Unemployment Rate will also be of importance to those invested in the single currency.
US Dollar (USD) Exchange Rate Forecast to Fluctuate
With traders likely to jump on any positive data result, the US Dollar is likely to fluctuate over the course of the coming week. Given that most of the recent data publications have yielded poor results, however, there is a high likelihood of further disappointment to come.
Of particular importance will be the Federal Open Market Committee (FOMC) interest rate decision. However, given the poor data of late, the Fed are very unlikely to make any changes.
In addition to the rate decision, the most significant publications, in terms of the potential to initiate volatility, are; Consumer Confidence, Annualised Gross Domestic Product, Personal Consumption, GDP Price Index, Core Personal Consumption Expenditure and ISM Manufacturing.
In addition to the US data already mentioned; Markit Composite PMI, Markit Services PMI, S&P/Case-Shiller Composite-20, MBA Mortgage Applications, Core Personal Consumption Expenditure, Pending Home Sales, Personal Income, Personal Spending, Initial Jobless Claims, Continuing Claims, Construction Spending, ISM Prices Paid and U. of Michigan Confidence have the potential to provoke changes.
Although European economic data is unlikely to be particularly impactful, it will still be of significance as a gauge of how the European Central Bank’s (ECB) stimulus measures are performing.
Should US data improve, on the whole, the Dollar is likely to rally as rate hawks will buy the ‘Buck’ (USD) in droves.
At the close of last week, the Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.0782 and 1.0900.
