The Euro to US Dollar (EUR/USD) exchange rate edged higher by around 0.12% on Wednesday morning.
Although German growth data produced poor results, the shared currency strengthened versus many of its major peers on Wednesday. The advance can be linked to better-than-expected French growth data and improved German inflation data. The geopolitical tensions in Greece are still weighing on Euro investment, however.
The US Dollar, meanwhile, softened versus the majority of its most traded currency competitors on Wednesday. This is the result on speculation that the Advance Retail Sales data, due for publication later on Wednesday afternoon, will show sales cooled in April.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1231.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate rallied by over 1.0% on Tuesday morning.
In response to Greece having repaid the International Monetary Fund (IMF) €750 million of its debt early, the common currency advanced versus the majority of its most traded currency competitors. However, this has not alleviated concern that Greece will inevitably default on a future loan repayment if they can’t secure bailout funds from creditors.
The US Dollar, meanwhile, softened versus the majority of its most traded currency rivals after Monday’s domestic data failed to impress. Additionally, the ‘Greenback’ (USD) slide can be linked to a new senate bill which restricts the Federal Reserve from bailing out banks previously described as ‘too big to fail’.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1265.
Euro (EUR) Exchange Rate Forecast to Strengthen versus the Pound and US Dollar despite Greece’s Cash Crisis
Although the markets have responded positively to Greece making the IMF loan repayment slightly earlier-than-expected, the €750 million is just a portion of the total debt, and Greece has been left with only enough cash to survive until the end of the month. There is a high likelihood that the single currency will resume bearish trade if Greece and the Eurozone can’t resolve issues and allow Greece to secure bailout funds.
Germany has urged Greece to have a referendum on the Euro, but this could bring increased trouble for the struggling nation as creditors would be very unlikely to give any money until the referendum concluded. ‘If the Greek government thinks it must hold a referendum, then let it hold a referendum,’ Schaeuble said on arriving at a meeting of Eurozone finance ministers. ‘That might even be a helpful measure for the Greek people to decide whether it is ready to accept what is necessary, or whether it wants something different.’
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1131 today.
US Dollar (USD) Exchange Rate Forecast to Soften versus the Euro and Pound Sterling ahead of Monthly Budget Statement
After Monday’s Labour Market Conditions Index Change declined from the negatively revised previous figure of -1.8 to -1.9 in April, the US Dollar softened versus the majority of its major peers. The declination was fractional, however, amid speculation that the Federal Reserve will move away from a data-centric monetary policy to accommodate economic evolution.
Tuesday has seen the US Dollar continue to decline after a senate bill, known as the Dodd-Frank act, was passed to restrict the Fed’s ability to bailout banks previously labelled as ‘too big to fail’. ‘This gets to the heart of a key statement about Dodd-Frank, that there is no more too-big-to-fail,’ said Norbert Michel, a research fellow at the Heritage Foundation in Washington. ‘Shedding light on what DOJ did and did not do would be great for addressing that.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains ahead of US Data
As traders await the US Monthly Budget Statement, due for publication later on Tuesday, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold gains. Should the data print positively, however, the US Dollar could potentially rally.
Wednesday will be of significance for the EUR/USD pairing with German and Eurozone growth data and US Advance Retail Sales due for publication.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high of 1.1275 today.