The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.13% on Wednesday morning.
After having strengthened considerably following positive results from European data, the shared currency softened on Wednesday. This can be attributed to escalating tensions regarding Greece’s position in the Eurozone.
The US Dollar, meanwhile, is generally ticking higher versus many of its major peers. This is as a result of trader fears that Tuesday’s declination was overdone. However, a succession of poor results from domestic data is forcing futures traders to pare bets as to the timing of a rate hike.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1399.
Yesterday…
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.50% on Tuesday morning.
After European data printed positively, the single currency strengthened versus the majority of its most traded currency rivals. The extent of the advance is somewhat surprising given the mounting anxieties regarding a potential Grexit after the Eurogroup failed to resolve Greece’s debt issues.
The US Dollar, meanwhile, is generally trending lower versus most of its major peers thanks to an absence of domestic data to provoke changes.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1390.
Euro (EUR) Exchange Rate Strengthens on Positive Data
In the initial aftermath of the Eurogroup’s failure to find a utilitarian resolution to the Greek debt crisis, the shared currency slumped versus its major peers. However, most of those losses were recovered on Tuesday morning as traders feared that the declination was overdone with further Eurogroup meetings to come.
European data printed positively on Tuesday, which caused the common currency to advance versus the majority of its most traded currency counterparts. The German ZEW Economic Sentiment Survey increased from 48.4 to 53.0, although failing to reach the median market forecast of 55.0. The Eurozone Economic Sentiment Survey advanced from 45.2 to 52.7. The German ZEW Current Situation Survey eclipsed the market consensus of a rise from 22.4 to 30.0, with the actual result jumping to 45.5.
‘Quantitative easing by the European Central Bank and unexpectedly high economic growth in the fourth quarter of 2014 have improved sentiment among financial market experts,’ said ZEW President Clemens Fuest.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1321 today.
US Dollar (USD) Exchange Rate Dips ahead of US Data
Given that US data has produced a string of disappointing results of late, expectations that the Federal Reserve will be the first central bank to hike rates has dwindled somewhat. Those trading with the Dollar will be hoping that housing data will print positively in order to reignite speculation that the Fed will lead the way when it comes to rate hikes.
Kevin Logan, Chief US economist at HSBC, said; ‘The combination of faster prospective growth and lower inflation creates a quandary for the Federal Reserve. Plans for a rate hike at mid-year may have to be delayed until the policymakers are certain that inflation has stopped falling.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains
Although the US data, due for publication later on Tuesday, has the potential to provoke volatility, it is unlikely to overshadow Europe’s positive data. However, changes for the Euro to US Dollar (EUR/USD) exchange rate will be likely as geopolitical tensions mount. With several influential US data publications on Tuesday, there is a high likelihood of EUR/USD volatility.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high today of 1.1414.
