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Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Dive as Greece Tumbles towards Insolvency, Safe-Haven Demand

The Euro to US Dollar (EUR/USD) exchange rate dived by around -0.92% on Monday morning.

Greek Prime Minister Alexis Tsipras has called for a referndum on the proposed austerity measures, causing the Euro to dive versus its peers. The government has now imposed capital controls and Greek banks have closed to avoid a complete financial breakdown.

The US Dollar, meanwhile, advanced versus its rivals thanks to heightened demand for safe-haven assets. US Pending Home Sales, due for publication later on Monday, has the potential to provoke US Dollar volatility.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1072.

Previously…

The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.54% on Friday afternoon. 

After yesterday’s attempt to find an aid deal for Greece to unlock aid showed little sign of progress, the Euro is generally holding steady versus its peers. A very slight appreciation can be linked to optimism that the emergency meeting scheduled for Saturday will be more successful given Greece’s looming deadlines and lack of choice.

The US Dollar, meanwhile, softened versus many of its rivals as traders digest Thursday’s less-than-ideal data, which saw services growth slowed unexpectedly. University of Michigan Confidence printed positively, however, which caused the ‘Greenback’ (USD) to advance versus many of its rivals. Dampened market sentiment also bolstered demand for the safe-haven US Dollar.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1155.

Euro (EUR) Exchange Rate Forecast to Tick Higher against the US Dollar despite Poor Data Results

European economic data printed relatively poorly on Friday, although the results had minimal impact on Euro movement with trader focus dominated by the crisis in Greece. May’s German Import Price Index declined by -0.2% on the month, missing the median market forecast growth of 2.0%. On the year, May’s German Import Price Index dived by -0.8% despite expectations of -0.4% declination. In addition, Eurozone M3 data failed to meet with the market consensuses.

Eurozone finance ministers have scheduled another emergency talk with Greek officials on Saturday. This is cutting it close to the wire, although some traders are optimistic that the Hellenic nation’s lack of choice and looming deadlines will be enough to scare Greek Prime Minister Alexis Tsipras into adopting the measures proposed by creditors.

The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1176 today.

US Dollar (USD) Exchange Rate Forecast to Adance against the Common Currency on US Confidence Data

In response to slower-than-anticipated US services, the ‘Buck’ (USD) declined versus many of its competitors. The poor results led futures traders to question Federal Reserve Governor Jerome Powell’s predictions of a double rate hike in 2015. Some analysts are now going so far as to say that the rate hike race could be lost to the UK as the British economy looks set to be able to accommodate a higher rate.

The final figure for June’s University of Michigan Confidence was forecast to hit 94.6, but the actual result was upwardly revised to 96.1. The Baker Hughes US Rig Count may also impact Dollar movement. It will also impact the oil market. If the rig count rises significantly, oil prices will decline.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Losses on Safe-Haven Demand

Given that European economic data had minimal impact, and with trader focus dominated by the situation in Greece, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold losses. In addition, damp market sentiment will continue to weigh on the pairing. With that being said, if any European officials make dovish comments regarding the Hellenic nation, the EUR/USD could dive on demand for safe-haven assets.

The Euro to US Dollar (EUR/USD) exchange rate advanced to a high of 1.1220 today.