The Euro to US Dollar (EUR/USD) exchange rate edged higher by around 0.57% on Wednesday afternoon.
Euro (EUR) Exchange Rate Forecast to Tick Higher against the ‘Greenback’ (USD) after Greece Given until Sunday to Submit Reforms
In the aftermath of the 61% ‘No’ victory in the Greek austerity referendum, Greek officials were given just hours to submit new reforms to creditors. The timing proved impossible, however, and Greek representatives failed to submit proposal in time. The Eurogroup has extended the deadline until Sunday and this caused the Euro to climb as optimistic traders hoped it would allow for a more in-depth proposal.
The European Central Bank (ECB) will decide today whether to continue Emergency Liquidity Assistance (ELA) for Greek banks. The Greek financial system has been incredibly reliant upon ELA so the ECB’s decision will be crucial. Most traders agree that the ECB will wait to see whether Greece can secure a deal to unlock aid on Sunday.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1070.
US Dollar (USD) Exchange Rate Forecast to Edge Lower against the Common Currency (EUR) ahead of FOMC Minutes
The Federal Open Market Committee (FOMC) minutes from the June 16th – 17th policy meeting will be published later on Wednesday evening. This will be a significant publication as it will show how many policymakers, if any, voted against holding the cash rate. Most traders expect relatively dovish minutes given that there has been no leeway made towards devaluing the ‘Buck’ (USD).
Although there is slightly increased optimism regarding the Greek situation after the proposal submission deadline was extended, the US Dollar is still climbing versus most of its peers thanks to demand for safe-haven assets. This is despite the fact that the International Monetary Fund (IMF) has, once again, warned against an early Fed benchmark rate hike.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0971 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains ahead of ECB Decision
With Greek banks only staying afloat as a result of ELA, the ECB’s decision on whether to discontinue assistance is of paramount importance. Should they opt to withdraw liquidity assistance, the shared currency is likely to dive versus its peers. Therefore, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold gains ahead of the ECB’s decision. The FOMC minutes are also likely to have an impact on the EUR/USD exchange rate.
Thursday’s economic data is unlikely to be particularly impactful with geopolitics and market sentiment dominating trade. With that being said, US labour market data has the potential to provoke EUR/USD changes.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1059 today.