The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.36% on Wednesday morning.
Although many analysts believe that Greek officials have a lot to do before securing bailout funds, optimism that they will reach a deal before loan deadlines has caused the Euro to strengthen versus many of its peers. Eurozone officials convene for the third time in a week to tackle the Greek financial crisis.
The US Dollar, meanwhile, softened as traders digest the less-than-ideal results from Durable Goods Orders in May. The US asset avoided declination on Tuesday thanks to comments by Federal Reserve Governor Jerome Powell who predicted two Fed benchmark interest hikes in 2015.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1213.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate dived by around -1.34% on Tuesday afternoon.
Despite the fact that European economic data produced better-than-expected results on Tuesday, the common currency slumped across the board. The declination can be attributed to Greece having been given just 48 hours to secure a deal to unlock aid. Many experts are questioning whether this will be enough time for Prime Minister Alexis Tsipras to convince hard-left back benchers to adopt reforms which compromise many electoral red lines.
The US Dollar, meanwhile, advanced versus its major peers as demand for safe-haven assets increased amid speculation the Hellenic nation will not secure bailout funds. The Durable Goods Orders report declined beyond expectations, but the US asset continued to strengthen thanks to a pick-up in capital goods orders and Durables ex transportation.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1192.
Euro (EUR) Exchange Rate Forecast to Soften against the ‘Buck’ (USD) Despite Positive Ecostats
In the wake of the Eurogroup Summit to discuss Greece, the Hellenic nation has been given just 48 hours to draft new proposals for reform and strike a deal to unlock the €7.2 billion bailout package waiting in the wings. The Euro dived in response to this ultimatum as many analysts fear that Tsipras will not be able to convince his own party members to agree to a deal culminating with aggressive austerity cuts.
Although the situation in Greece dominates trader focus, European economic data produced positive results.
The German and Eurozone Services, Manufacturing and Composite PMIs all eclipsed the respective median market forecast figures. Commenting on the Eurozone flash PMI data, Chris Williamson, Chief Economist at Markit said; ‘The second quarter upturn signalled by the PMI puts the region on course to expand by around 2.0% this year, though much of course depends on the outcome of the Greek debt negotiations and any resulting impact on growth in the second half of the year. The uncertainty generated by the recent escalation of the crisis appears to have taken some of the steam out of hiring growth, but employment over the second quarter as a whole has nevertheless shown the largest rise for four years to suggest that – at present at least – the Eurozone economy is weathering the Greek storm relatively well.’
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1223 today.
US Dollar (USD) Exchange Rate Forecast to Hold Gains against the Common Currency on Safe-Haven Demand
With the geopolitical situation in Greece weighing on trader risk-appetite, the US Dollar advanced versus most of its major peers on Tuesday amid heightened demand for safe-haven assets. US Dollar gains have been somewhat sluggish, however, with futures traders still anticipating a long delay to a Federal Reserve benchmark rate increase.
Durable Goods Orders declined by -1.8% in May. However, the US Dollar continued to strengthen versus the majority of its most traded currency rivals after Capital Goods Orders and Durable Goods ex Transportation advanced. ‘Orders to U.S. factories for long-lasting manufactured goods fell in May, pulled down by a sharp drop in demand for aircraft. But a category that reflects business investment rose last month, a hopeful sign for manufacturing,’ stated Paul Wiseman writing for AP economics.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Losses on Greek Pessimism
Given the extent of the depreciation, and with European economic data having minimal impact on shared currency movement, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold losses for the remainder of Tuesday’s European session. Wednesday ought to see EUR/USD volatility with several data publications due for both Europe and North America.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high of 1.1346 today.