The Euro to US Dollar (EUR/USD) exchange rate ticked higher by around 0.44% on Thursday afternoon.
As traders await news from the European Commission meeting, in which they decide whether to give bailout funds to Greece, the shared currency is edging higher versus many of its peers. The appreciation can be attributed to optimism that Athens will concede to creditors’ demands lest they find themselves defaulting on massive payments to the International Monetary Fund (IMF).
The US Dollar, meanwhile, softened versus most of its currency rivals after Core Consumer Prices dipped in May. With inflation showing little sign of a swift pickup, futures traders are postponing bets as to the timing of a Federal Reserve interest rate hike.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1411.
Euro (EUR) Exchange Rate Forecast to Strengthen against the ‘Buck’ (USD) on Greek Optimism
Although all talks between Greek officials and the Eurogroup thus far have ended with very little progress made, optimism that today’s meeting in Luxembourg will see Greece secure bailout funds has caused the single currency to appreciate versus many of its peers. This optimism stems from the fact that Greece has run out of time and needs to make a decision on whether to make concessions or face defaulting and ultimately exiting the Eurozone.
‘I’m still convinced – where there’s a will, there’s a way,’ said German Chancellor Angela Merkel. ‘If those in charge in Greece can muster the will, an agreement with the three institutions is still possible. Germany’s efforts remain focused on keeping Greece in the Eurozone.’
Should Greek officials fail to bridge gaps today, there is a very real possibility that the credit line will run dry and the Hellenic nation will have to seek funds elsewhere in order to stay afloat.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1337 today.
US Dollar (USD) Exchange Rate Forecast to Soften against the Single Currency on Pared Fed Bets
Thursday’s North American economic data printed mostly disappointingly, causing the US Dollar to soften versus most of its major peers. Of particular detriment was inflation data. May’s Consumer Price Index came in at 0.0% on the year, failing to meet with the median market forecast 0.1%. The annual Core Consumer Price Index declined in May, dropping from 1.8% to 1.7% despite predictions it would hold. The slower rate of inflation growth has caused many futures traders to pare bets as to the timing of a Federal Reserve benchmark rate hike, a feeling already initiated by Chair Janet Yellen who gave a comparatively dovish speech on Wednesday.
‘Dollar bulls are suffering a bit as a result of the [Federal Reserve and Chairwoman Janet Yellen], and the data today isn’t going to help their cause,’ said Brad Bechtel, managing director in Jefferies Foreign Exchange Group. ‘We’re doing damage on the dollar-long positions, but not breaking out of recent trading ranges against the Euro or the Yen.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate on Eurogroup Decision
The Euro to US Dollar (EUR/USD) exchange rate will hinge on the decision made by the Eurogroup today regarding bailout for Greece. Friday will be significant for the pairing as Eurozone officials meet to discuss Greece and the outcome of today’s meeting. US data will be less impactful on Friday, but the Baker Hughes US Rig Count has the potential to provoke changes.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high of 1. 1428 today.