UPDATE
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.3% on Wednesday morning.
As traders prepare for the results of the German vote on the terms of Greece’s third bailout package, the common currency edged higher versus many of its currency rivals. The appreciation can be attributed to confidence that Germany will accept the proposal despite the fact that German Chancellor Angela Merkel will face rebellion from her own party.
The US Dollar, meanwhile, softened versus most of its currency rivals ahead of inflation data. Given the varied nature of results from recent ecostats, traders are showing reluctance to invest in the US asset ahead of the inflation report.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1058.
Yesterday…
EUR Exchange Rate Softens as Traders Await Eurozone Vote on Greek Bailout
The Euro to US Dollar (EUR/USD) exchange rate was trending within a tight range on Tuesday morning.
As traders await news from Euro-area nations as to their vote on the terms for the third Greek bailout program, the single currency softened versus most of its currency rivals. Spain, Estonia and Austria are all set to submit votes on Tuesday. With a complete absence of domestic data to provoke volatility, the shared currency will be subject to developments with Greece’s bailout. Any delays at this point will spook investors given that the Hellenic nation is due to make a hefty repayment to the European Central Bank (ECB) in just two days; something that can only be accomplished if Greece receives financial aid.
Although most traders are confident that the terms will be passed by Euro-area nations, the single currency declined as traders questioned the stability of Greece’s political outlook. With Greek Prime Minister Alexis Tsipras trying to deal with rebellious MPs and juggle receiving financial aid at any cost, many fear snap elections could throw all of the recent developments out of the window.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1064.
USD Exchange Rate Edges Lower ahead of Housing Starts and Building Permits
With divergent opinions as to the timing of a Federal Reserve benchmark rate hike, the US Dollar has been subject to significant fluctuations of late. A slight downtrend on Tuesday can be linked to speculation that the recent issues in China will cause Federal Open Market Committee (FOMC) members to delay a benchmark rate hike until 2016.
In addition to fears regarding China’s influence on the FOMC, traders are closely scrutinising every domestic data publication given that the Fed made it very clear that rate changes will be subject to data results. Building Permits and Housing Starts, due for publication later on Tuesday, will be likely to provoke changes for the US asset.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1049 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate on US Data
Given that we are yet to hear whether the terms of the Greek bailout are acceptable to Euro-area nations, and with US data due for publication later on Tuesday afternoon, the Euro to US Dollar (EUR/USD) exchange rate is likely to fluctuate over the course of Tuesday’s European session.
Wednesday will be significant for the paring with US inflation data scheduled for release. In addition, more Euro-area nations will vote on the Greek bailout.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1094 today.