The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.43% on Wednesday morning.
Given that the situation in Greece has not developed, traders have been able to use data results to drive Euro movement. A succession of comparatively positive results aided a fractional Euro uptrend. However, there is a high likelihood that geopolitics will be the focal point of Euro changes as the European session progresses.
The US Dollar, meanwhile, softened as traders are unsure how the Federal Open Market Committee (FOMC) minutes from their most recent policy meeting will read. Most are expecting relatively dovish comments given the recent spate of disappointing data results.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0860.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.79% on Tuesday afternoon.
With the situation in Greece having a detrimental effect on investor confidence in the Eurozone, the common currency dived versus the majority of its most traded currency rivals. The relationship between Greece and Germany continues to fray at the edges and fears of a Grexit have, once again, been amplified.
The US Dollar, meanwhile, recovered some of the losses from Friday’s extremely disappointing labour market data. The recovery is likely to be connected to speculation that the Federal Open Market Committee (FOMC) minutes from the most recent policy meeting will contain hawkish elements with regards to future rate hikes.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0852.
Euro (EUR) Exchange Rate Softens on Investor Confidence
Once again, Athens is demanding World War Two reparations to the sum of €279 billion, but the Germans are holding firm in their belief that Greece is not owed for Nazi occupation. ‘According to our calculations, the debt linked to German reparations is 278.7bn Euros,’ Greek Deputy Finance Minister Dimitris Mardas told a parliamentary committee investigating responsibility for Greece’s debt crisis.
‘Apart from whatever damages that Greece might claim – and, to be honest, I think whatever legal basis for claiming those has now gone — (but) there was a loan that Greece was forced to pay to the occupying Nazis forces in the second world war that was recorded – and there is a legal issue over that loan but I think that is for a much smaller amount of around 11 billion Euros,’ stated Nick Malkoutzis, deputy editor of Greek newspaper Kathimerini.
The situation in Greece has understandably had a detrimental effect on investor confidence.
Eurozone Investor Confidence, as measured by Sentix, was forecast to improve from 18.6 to 20.8, but the actual result only managed to reach 20.0.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.0832 today.
US Dollar (USD) Exchange Rate Edges Higher ahead of Minutes
Recent economic data out of the US has shown a blip in the relatively positive economic recovery initiated towards the end of last year. Friday’s particularly disappointing Non-Farm Payrolls data caused analysts to speculate that the US economy will see sustained deterioration.
The US Dollar, however, ticked higher on Tuesday afternoon amid speculation that the FOMC minutes will contain hawkish tones. However, the meeting came before many of the disappointing data results had been published, which could make the minutes obsolete.
‘The timing of normalization will be data dependent and remains uncertain because the future evolution of the economy cannot be fully anticipated,’ said New York Fed President William Dudley, adding he expects the path of rate hikes to be ‘relatively shallow.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate
Although the Euro to Us Dollar (EUR/USD) exchange rate is likely to hold gains as geopolitical tensions weigh heavily on demand for the common currency, there is the possibility of fluctuations given that many are unsure as to how the Fed will approach monetary policy after the recent bearish data. US Consumer Confidence data, due for publication later on Tuesday evening, has the potential to provoke changes for the EUR/USD exchange rate.
Wednesday is likely to see heightened EUR/USD volatility with the publication of FOMC minutes and German Factory Orders data.
The Euro to US Dollar (EUR/USD) exchange rate reached a high of 1.0955 today.