The Euro to US Dollar (EUR/USD) exchange rate edged higher on Tuesday as data showed that economic confidence in the Eurozone climbed to its best level in eight months.
According to the ZEW Centre for Economic Research, its index of Eurozone Economic Sentiment climbed to a better than forecast reading of 52.7. The number was better than the 51.69 expected and was a solid improvement on the preceding month’s level of 45.2.
‘Quantitative easing by the European Central Bank and unexpectedly high economic growth in the fourth quarter of 2014 has improved sentiment among financial market experts. Despite the rise, the intensification of the Ukraine crisis and the collision course of the new Greek government are dampening expectations,’ said Clemens Fuest, ZEW President.
Also offering support to the single currency was another ZEW compiled report, which showed that economic sentiment in Germany soared to a one-year high in February. The ZEW index for economic sentiment soared by 4.6 points to 53.0.
The figure was a solid improvement on January’s figure of 48.4 but was just short of expectations for a rise to 55.0.
The Euro to US Dollar exchange rate is forecast to go back on the retreat over the course of the week as the deadline for the Greek deadline draws closer. At yesterday’s Eurogroup meeting in Brussels, Greek Finance Minister Yanis Varoufakis called the EU deal to extend the nations bailout as ‘absurd’ and ‘unacceptable’.
Athens now has until the end of the week to request an extension otherwise its bailout will expire and the nation will run out of money, an event that could cause the nation to leave the Eurozone. Such an event will rock the markets as fears that other debt ridden Euro members could follow suit.
The US Dollar meanwhile was softer against many major currencies as recent disappointing domestic data continues to weigh and as investors look ahead to data releases due later in the session. In focus will be the latest New York State Manufacturing Index and NAHB Housing market index.
The main event of the week however will be the release of the minutes of the Federal Reserve’s February policy meeting. Any hint that recent soft economic data is causing policy makers to hesitate on raising interest rates will likely send the ‘Greenback’ falling.
Euro Exchange Rates:
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