The Euro to US Dollar (EUR/USD) exchange rate is forecast to claw back some lost ground next week but any gains will all depend on the outcome of Monday’s crunch meeting of European Finance Ministers.
Economists are hoping that a deal will be reached between the Syriza led Greek government and its creditors in the European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF).
A similar meeting held on Wednesday ended in a stalemate with no decision being decided. Greece is set to run out of funds at the end of the month and time for a compromise to be reached is running out fast.
Greece’s government has said that it will do everything it can for a deal to be reached but added that it will not abandon its pledge to the Greek people to end austerity. Data released at the end of the work further highlighted the challenges facing the country as it showed that the Greek economy contracted by 0.2% on a quarter on quarter basis in the final quarter of 2014.
In comparison Germany’s economy expanded strongly and the Eurozone as a whole expanded by 0.3%.
Euro to US Dollar Exchange Rate Forecast
The Euro could find some support on Monday if the latest balance of trade data shows that the Eurozone’s trade surplus ticked higher in December. Economists are expecting the surplus to grow from €20 billion to €20.5 billion. A positive report will add to hopes that the single currency bloc is showing signs of a recovery.
The US Dollar meanwhile will see little movement as the American markets are closed for the President’s Day national holiday.
On Tuesday, the Euro could push higher if a deal on Greece is reached, and the latest batch of ZEW compiled economic sentiment reports come in positively. With no market moving US data due, the currency will be at the mercy of events elsewhere.
Midweek, the US Dollar could push higher against the Euro if domestic industrial and manufacturing production data comes in positively. Any hint of a slowdown and the ‘Greenback’ will come under pressure as fears will grow that the world’s largest economy could be slowing down.
The main event of the week for the US Dollar comes on Wednesday when the Federal Reserve publishes the minutes of its February policy meeting.
The minutes are expected to provide details on the central bank’s decision to boost its assessment of the economy while reiterating that policy makers can be “patient” deciding when to raise interest rates.
On Thursday, the ECB publishes an account of its Jan. 22 meeting, at which it decided to start quantitative easing. It will be the first time the central bank has published a record of its monetary-policy meetings under a new plan to increase transparency.
The end of the week will be rounded off by the release of Purchasing Manager Index releases out of both the Eurozone and US.
Investors will also be keeping an eye on events in Ukraine as a brokered ceasefire shows little chance of holding.
On Sunday the Euro to US Dollar (EUR/USD) exchange rate was trading in the region of 1.1394
