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Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Rally as Greece Drafts New Reforms

The Euro to US Dollar (EUR/USD) exchange rate advanced by around 1.60% on Friday afternoon.

The shared currency recovered some of its recent losses on Friday morning with the news that Greece are rushing to draft a reform plan that will please creditors. Mostly disappointing domestic data, however, saw gains somewhat laboured.

After having surged significantly on Thursday, the US Dollar resumed declination on Friday morning. This is likely to be as a result of fears that the surge was unjustified and overdone. Additional Dollar softness might be the result of trader profit-taking after the Dollar’s upswing led to some attractive selling positions.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0838.

Euro (EUR) Exchange Rate Edges Higher despite Poor Data

European economic data failed to impress on Friday morning. February’s German Producer Prices declined by -2.1% on the year, with the monthly prices only strengthening by 0.1%. In addition, non-seasonally adjusted Eurozone current account dropped from 35.2 billion to 8.2 billion in January.

This data had minimal impact, however, after Greece was told to produce a program of reform in order to meet the demands of creditors. After the meeting broke up, Angela Merkel told reporters that Alexis Tsipras had agreed to present reforms: ‘The Greek prime minister declared he is willing to submit such a list and do so quickly…That is needed urgently, and it is needed to focus minds.’

As one official explained to the BBC; ‘The message to Greece was simple – give us a list fast, then you can get the money fast.’

The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.0653 today.

US Dollar (USD) Exchange Rate Ticks Lower on Profit-Taking

After Federal Reserve Chair Janet Yellen dropped the word ‘patient’ with regard to rate revisions, the US Dollar surged significantly. However, upon closer inspection of the Fed rate decision and the following press conference, the tone was generally dovish with rate hikes being described as gradual.

‘It seems the Fed continues to believe the costs of hiking [rates] too early and too fast are clearly higher than the costs of being behind the curve and moving more slowly,’ said Anna Stupnytska, global economist at Fidelity Worldwide Investment. ‘For this reason, the Fed will not move until they, and the markets, are absolutely sure. In this respect, three indicators are key to watch; unemployment and its broader measures; wage growth; and core inflation. Only a definitive turnaround in these will give the Fed confidence to move ahead with the first hike but even then there will be no rush to keep tightening.’

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate

With traders seemingly unsure how to treat the US Dollar, as evidenced by the large fluctuations since the Federal Open Market Committee held the cash rate on Wednesday, the Euro to US Dollar (EUR/USD) exchange rate is likely to fluctuate over the course of the European session. Speeches from Fed officials later on Friday may also provoke EUR/USD movement.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.0695 today.