The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.24% on Thursday morning.
Despite the fact that European economic data produced mostly disappointing results, the common currency broadly advanced on Thursday. This can be attributed to speculation that the Eurogroup meeting in Riga tonight will see greater progress made towards Greece securing vital aid.
The US Dollar, meanwhile, softened versus its closest rivals in response to dovish minutes from the most recent Federal Open Market Committee (FOMC) meeting. Disappointing domestic data also weighed on demand for the US asset.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1128 today.
Euro (EUR) Exchange Rate Forecast to Soften versus the Pound ahead of Riga Meeting
In response to divergent data results, the single currency softened versus its British neighbour.
European economic data printed relatively poorly on Thursday. Of particular detriment to demand for the single currency was data out of the currency bloc’s most influential nation. German Manufacturing, Services and Composite PMIs all failed to meet with median market forecast growth.
‘It looks as if this rate of expansion of the German economy will remain sluggish in the months ahead,’ said Oliver Kolodseike, an economist at Markit. ‘Companies reported weaker expansions in both output and new orders, with some survey participants commenting on weak demand, economic uncertainties and rising cost pressures.’
However, the common currency strengthened versus many of its closest assets despite the lack of positive data. The appreciation is the result of traders expecting more progress in the Eurogroup meeting in Riga tonight. With little time left before the Hellenic nation run out of money, the urgency to secure aid should see more concessions made by the anti-austerity Greek government.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1077 today.
US Dollar (USD) Exchange Rate Forecast to Dive versus the Euro on FOMC Minutes
Minutes from the most recent FOMC meeting printed relatively dovishly, prompting a ‘Greenback’ (USD) declination. The minutes disregarded any notion of a June liftoff in interest rate increases, with the long succession of poor data results weighing on policymaker confidence. In addition, the Fed officials only expected a moderate pickup to growth in the second half of 2015.
‘The tone of the Minutes echoed the more sober assessment of economic activity evident in the April FOMC statement and the March meeting when the Committee’s GDP forecasts were downgraded,’ stated the Research Team at ANZ.
US data produced a mixed-bag of results on Thursday which caused the US Dollar to decline versus many of its most traded peers. Of particular detriment was higher-than-expected Initial Jobless Claims, lower-than-expected manufacturing output and a significant drop in Existing Home Sales.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains on Lack of Data
Given the lack of further domestic data publications to provoke changes, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold gains for the remainder of Thursday’s European session.
The outcome of the meeting in Riga this evening will also have a significant impact on EUR/USD volatility.
The Euro to US Dollar (EUR/USD) exchange rate reached a high of 1.1173 today.