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Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Rally after US Advance Retail Sales Decline

UPDATE

The Euro to US Dollar (EUR/USD) exchange rate rallied by around 0.64% on Tuesday afternoon.

Despite the fact that many analysts are predicting that Greek Prime Minister Alexis Tsipras will not convince his government to accept the bailout deal, the Euro is generally trending higher versus most of its major peers. However, the gains could be short lived after a document from the International Monetary Fund (IMF) leaked which stated that the deal will not work because Greece’s debt is not sustainable at current levels.

The US Dollar, meanwhile, dived versus its peers after Advance Retail Sales declined unexpectedly. June’s retail sale declined by -0.3%; missing the median market forecast 0.3% growth in sales. The report is likely to disappoint rate hawks hoping for a September rate hike.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1054.

previously…

The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.49% on Tuesday morning.

Euro (EUR) Exchange Rate Forecast to Edge Higher against the US Dollar on Overdone Depreciation

The shared currency declined significantly on Monday as traders predicted that the deal hashed out between Greek Prime Minister Alexis Tsipras and Eurogroup officials would not be accepted by Syriza. However, Tuesday saw the common currency advance versus its peers amid speculation that the depreciation was overdone.

Mixed results from European economic data wasn’t enough to reverse the Euro appreciation. However the significant decline in Eurozone Economic Sentiment in July, from 53.7 to 42.7, could have a delayed impact as traders digest the numbers. With that being said, the shared currency is likely to hold gains until more is known regarding Syriza and the bailout deal.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1036.

US Dollar (USD) Exchange Rate Forecast to Edge lower against the Single Currency (EUR) ahead of US Data

Despite heightened demand for safe-haven assets amid concerns that Greek politicians will reject the latest deal to unlock bailout funds, the US Dollar declined during Tuesday’s European session. The depreciation can be linked to speculation that June’s Advance Retail Sales will produce a disappointing result.

Also weighing on demand for the US Dollar is the strained relationship between the Federal Reserve and Congress. Congress has been asking the Fed to be more transparent after the possible leak of confidential information from its September 2012 policy meeting. A central bank spokesman said ‘the Federal Reserve Board values transparency and accountability and aims to respond in a timely and complete manner to all congressional inquiries.’ However, Congress is now probing the reluctant independent Federal Reserve on the possible leak, with Chairwoman Janet Yellen’s job hanging in the balance.

‘The fact that we have to reiterate and re-ask the same questions hearing after hearing…should indicate there is a problem of lack of transparency despite all their so-called efforts to ameliorate it,’ said Rep. Scott Garrett (R., N.J.), who helped craft pending legislation to change Fed operations on both the monetary policy and regulatory sides.

The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0964 today.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains ahead of ECOFIN Conclusion

Until more is known regarding the ECOFIN meeting of European Union officials, who are attempting to work out the viability of short-term relief for Greece, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold gains. US Advance Retail Sales is likely to provoke EUR/USD volatility, although geopolitical developments may overshadow domestic data publications. With Tsipras currently attempting to persuade Syriza members to back the deal, there are still many unknowns which could impact on Euro demand as the European session progresses.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1044 today.