The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.20% on Wednesday afternoon.
As traders grow ever more pessimistic about Greece’s future as a member of the Eurozone, the common currency declined versus most of its currency rivals. The declination can be attributed to speculation that Greece’s latest reforms proposal, which by all accounts is a reworking of rejected drafts, will not be enough to unlock bailout funds.
The US Dollar, meanwhile, declined versus many peers despite relatively positive domestic data. The depreciation is the result of traders locking in profits after the recent surge opened up some attractive selling positions. In addition, fears that the overvalued US Dollar will hinder economic recovery are also weighing on demand for the ‘Greenback’ (USD).
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1328.
Euro (EUR) Exchange Rate Forecast to Advance against the ‘Greenback’ Despite Continued Geopolitical Tensions
After Greece submitted a fresh proposal for reforms to the European Commission, the shared currency rallied. The gains were short-lived, however, after it transpired that officials stated that the reforms were just a reworking of previously rejected proposals with no additional content. Wednesday has seen further single currency depreciation after German government official Michael Fuchs stated that the latest proposals were not serious enough to unlock aid.
Greek Prime Minister Alexis Tsipras, French President Francois Hollande and German Chancellor Angela Merkel are set to have an informal meeting tonight to discuss the latest proposal. However, uncertainty as to whether the meeting will take place has caused the Euro to decline, and many feel that the meeting will not go any way to resolving the delicate situation.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1259 today.
US Dollar (USD) Exchange Rate Forecast to Hold Steady against the Shared Currency as Trader Profit-Buying Outweighs Positive Data
After US Non-Farm Payrolls data printed particularly positively last week, the US Dollar has enjoyed a sustained bullish run. Even relatively mixed data results in the days following weren’t enough to prevent a significant US Dollar appreciation. Such has been the advance, however, that the US Dollar slumped significantly on Wednesday, despite positive domestic data, as traders lock in profits. MBA Mortgage Applications increased by 8.4% in the week ending June 5th, a significant improvement over the previous week’s declination of -7.6%.
Aiding the US Dollar downtrend are fears that the US Dollar is significantly overvalued. The International Monetary Fund (IMF) warned the Federal Reserve of the risk attached to increasing the cash rate on an already overvalued domestic asset. In addition, US President Barak Obama stated that the US Dollar overvaluation was a concern and could hinder the North American economic recovery.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate on Geopolitics
Given that the situation in Greece is dividing opinion as to whether the Hellenic nation will remain part of the Eurozone, and with the US Dollar volatile amid profit-locking, the Euro to US Dollar (EUR/USD) exchange rate is likely to fluctuate for the remainder of Wednesday’s European session. Thursday will be significant for the EUR/USD pairing with US Advance Retail Sales and labour market data due for publication.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1386 today.