The US Dollar to Euro (USD/EUR) exchange rate softened by around -0.41% on Thursday morning.
The shared currency strengthened on Thursday morning amid speculation of overselling. Ongoing geopolitical tensions and a potential Grexit is thought to cause yet more common currency declination in the long-term, however.
The US Dollar, meanwhile, retreated from a 12-year high after the Federal Reserve stress tests on Wall Street banks showed many of the institutions were still struggling 6-years after the financial crash.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9440.
Yesterday…
The US Dollar to Euro (USD/EUR) exchange rate advanced by around 1.29% on Wednesday morning.
Although US economic data printed negatively on Wednesday morning, the ‘Greenback’ (USD) strengthened versus most of its major competitors. The advance can be attributed to bets that the Federal Reserve will be the first major central bank to initiate a rate hike cycle.
The Euro, meanwhile, dived versus all of its major peers. This is as a result of ongoing tension in Greece after the nation demanded German compensation for Nazi occupation during World War Two.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9449.
US Dollar (USD) Exchange Rate Advances on Bullard Comments
Although the Federal Open Market Committee (FOMC) stated that rate revisions would be subject to domestic data results, the US Dollar continued to strengthen on Wednesday. This is likely to be a result of policy divergence as the European Central Bank (ECB) launches quantitative easing several months after the Fed ended QE in the US.
The US Dollar also gained thanks to comments by James Bullard, head of the Reserve Bank of St Louis. Bullard suggested that the Fed is long overdue to hike rates.
‘We are a little bit too late in this process,’ Mr Bullard said in an interview, arguing that the jobless rate had already fallen in line with Fed estimates of its long-run rate and that, netting out oil price effects, inflation was not that far below target. ‘Those kinds of readings on the economy are not sufficient to rationalise the zero policy rate.’
The US Dollar to Euro (USD/EUR) exchange rate has fallen to a low of 0.9329 today.
Euro (EUR) Exchange Rate Tumbles on Geopolitics
After Greek officials allowed the ‘troika’ of financial creditors back into Athens, following ECB President Mario Draghi’s warnings that they could lose all financial backing, many expected the shared currency to recover some of its losses.
However, tensions between Greece and Germany were amplified on Wednesday, which saw the single currency resume declination. Prime Minister Alexis Tsipras, once again, called for compensation from the Germans for all the money lost thanks to Nazi occupation during World War Two.
‘Germany has never properly paid reparations for the damage done to Greece by the Nazi occupation,’ Prime Minister Tsipras told the Greek parliament Tuesday. ‘The crimes carried out by the Nazis are still vivid, and we have a moral obligation to remember what the forces did to the country.’
US Dollar to Euro (USD/EUR) Exchange Rate Forecast to Trend Higher
Given the divergence in policy between the Federal Reserve and the ECB, the US Dollar to Euro (USD/EUR) exchange rate is likely to continue trending higher over the course of Wednesday’s trade. Thursday is likely to see heightened USD/EUR volatility with several US data publications due. European data is unlikely to have much of an impact with geopolitics dominating trader focus.
The US Dollar to Euro (USD/EUR) exchange rate advanced to a high of 0.9467 today.
