The Euro to US Dollar (EUR/USD) exchange rate was trending within a tight range on Tuesday morning.
With time of the essence, the situation in Greece is becoming rockier by the day. Fears that the cash-strapped country is likely to default on loan payments, which could lead to a forced Greek exit from the Eurozone, has weighed heavily on investor confidence. Given the complete absence of domestic data to provoke changes, the single currency is trending lower versus most of its major peers.
The US Dollar, meanwhile, softened versus many of its most traded currency rivals after Monday’s domestic data printed disappointingly. The succession of less-than-ideal data results has eased pressure on the Federal Reserve to tighten monetary policy. Consumer Confidence, due for publication later on Tuesday, is forecast to strengthen which is likely the reason for the ‘Greenback’s’ (USD) laboured declination.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0872.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate cooled by -0.17% on Monday afternoon.
As traders await the European Central Bank (ECB) Asset Purchase announcement, the common currency is generally trading statically versus most of its major competitors. Positive German economic data wasn’t enough to alleviate concerns regarding Greece’s future in the Eurozone, but those fears have already been priced-in to a certain extent.
The US Dollar, meanwhile, edged higher versus most of its major peers thanks to demand for safe-haven assets. With a string of disappointing US data results over the past few weeks, however, any signs of further economic weakness will likely cause the ‘Greenback’ (USD) to resume declination.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0853.
Euro (EUR) Exchange Rate Holding Steady ahead of ECB QE Announcement
Opinions are somewhat divided as to how the ECB will approach today’s asset purchase announcement. Whilst some feel that there will be no change at this early stage, others call for a reduction in bond purchases given the success the program has had thus far. Meanwhile, there are few that are concerned that the institution will run out of bonds to finance the operation.
One of those concerned about the lack of bonds for purchase is Abhishek Singhania of Deutsche Bank. ‘At present German nominal government bonds up to 4Y sector are ineligible because of the -20bp floor on yields. If bonds up to the 7Y sector started trading below -20bp the eligible universe would shrink such that the Bundesbank might not be able to purchase the required amount of bonds.’
German economic data had minimal impact on the shared currency despite printing relatively positively. March’s German Import Price Index declined by -1.4% on the year, avoiding the median market forecast declination of -2.0%. On the month, March’s German Import Price Index advanced by 1.0%, bettering the market consensus of a 0.4% increase.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.0822 today.
US Dollar (USD) Exchange Rate Climbs ahead of US Data
The ongoing troubles between Greece and Eurozone officials have seen particularly dampened market sentiment. The lack of risk-appetite was exacerbated on Friday after Greek Finance Minister Yanis Varoufakis took a grilling from the Eurogroup, some members of which labelled him a time waster. With very few options left to them, many fear that Greece’s lack of progress towards reformation is an ominous sign and will eventually lead to a forced exit from the Eurozone.
As a safe-haven currency, the US Dollar strengthened versus many of its most traded currency rivals in response to the lack of risk-appetite.
US data, due for publication later on Monday, will be of significance. After a recent succession of disappointing data results, futures traders were forced to pare bets as to the timing of a Federal Reserve benchmark rate increase. Should the US Services and Composite PMIs fail to meet with expectations, the US Dollar is likely to dive in response.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate
With the ECB bond-buying announcement to come, and with US Data due for publication, there is a high likelihood that the Euro to US Dollar (EUR/USD) exchange rate will fluctuate over the course of Monday’s European session.
Tuesday will see heightened EUR/USD volatility with US Consumer Confidence due for publication. The Euro is likely to see movement subject to geopolitical developments thanks to a complete absence of domestic data.
The Euro to US Dollar (EUR/USD) exchange rate reached a high of 1.0887 today.
