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Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Greek Economic Contraction Pulls Down Single Currency

While the US Dollar (USD) remains on bullish form ahead of the weekend, the Euro (EUR) has been softened as Greece’s third quarter GDP fell short of forecast.

US Dollar (USD) Strengthened as Durable Goods Orders Bettered Forecast, Odds of 2015 Fed Rate Hike Boosted

Domestic data was relatively limited for both the US and the Eurozone on Thursday, with the Euro to US Dollar (EUR/USD) exchange rate largely driven by speculation over the upcoming policy decisions of the European Central Bank (ECB) and Federal Open Market Committee (FOMC). The ‘Greenback’ (USD) remained on generally bullish form thanks to Wednesday’s unexpectedly strong Durable Goods Orders figure, which climbed from -0.8% to 3.0% on the month in October. Although the raft of economic releases were not universally positive, the odds of a December interest rate rise from the Fed remained high, bolstering demand for the US Dollar.

Traders were rather less optimistic about the outlook of the Euro (EUR) yesterday, however, as ECB policymakers were purported to be discussing a range of quantitative easing options. As traders are increasingly certain that monetary loosening is imminent, uncertainty over the extent and shape of any measures has helped to keep the single currency on a weaker footing.

Eurozone Business Confidence Declines Today to keep EUR/USD Exchange Rate on Downtrend

Friday’s Eurozone confidence surveys have proved disappointing, leaving the common currency unable to capitalise on the day’s lack of US economic releases as traders might have hoped. Business Confidence slipped from 0.44 to 0.36, while Consumer Confidence and Economic Sentiment showed limited movement in November. Offering a relatively weak assessment of the current economic state of the currency union this saw the Euro trending lower against the US Dollar today.

Greece has also returned to the headlines, with the announcement that the Hellenic nation has a fortnight to implement a number of mandated economic reforms in order to secure another one billion Euro tranche of bailout funds. Given the recent increase in political turmoil in Athens, this latest deadline is unlikely to spark particular confidence among investors, particularly as the Greek economy was today shown to have contracted by -0.9% in the third quarter.

EUR/USD Exchange Rate Forecast: Weak German Retail Sales and ECB Easing to Weigh on Outlook of Euro

Further volatility should be expected for the EUR/USD pairing after the weekend as the single currency is likely to see a general reduction in demand ahead of the ECB’s latest policy meeting. With Monday’s German Retail Sales forecast to show a sharp decline both on the year and the month in October there may be little incentive to buy back into the Euro.

Although the Chicago PMI is expected to show a slight slowing in manufacturing output for November the US Dollar is unlikely to see any particular decline in response as the odds of a December interest rate hike from the Fed are unlikely to be impacted.

Current EUR, USD Exchange Rates

At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was on a downtrend in the range of 1.0591, while the US Dollar to Euro (USD/EUR) pairing strengthened in the region of 0.9440.