The Euro to US Dollar (EUR/USD) exchange rate dived by around -0.78% on Tuesday morning.
Ongoing anxieties regarding Greece’s future in the Eurozone has seen the shared currency slump versus its most traded currency rivals. European Central Bank (ECB) President Mario Draghi is urging the Greek government to accept the troika before they find themselves without any financial aid.
The US Dollar, meanwhile strengthened after a declination caused by trader profit-locking. The recent positive labour market data is predicted to pressurise the Federal Reserve into hiking rates sooner-than-originally-expected.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0750.
The Euro to US Dollar (EUR/USD) exchange rate was trending within a narrow range on Monday afternoon.
Although fears that Greece will force an exit from the Eurozone mounted after creditors look likely to reject Greece’s proposal for debt repayment, the shared currency strengthened on Monday morning. The gains are as a result of the European Central Bank (ECB) launching quantitative easing despite concerns that they wouldn’t be able to source the bonds to finance the program.
The US Dollar, meanwhile, softened versus the majority of its most traded currency rivals after making massive gains following Friday’s impressive jobs data. The declination is as a result of trader profit-locking after the ‘Greenback‘ (USD) surge opened up some attractive selling positions.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0852.
Euro (EUR) Exchange Rate Gains as ECB Launch QE
With speculation rife that the ECB would fail to source the requisite bonds in order to finance quantitative easing in the Eurozone, Monday’s launch saw improved sentiment towards the European institution. The shared currency strengthened as a result, with many predicting that quantitative easing will go a long way towards aiding economic recovery in the currency bloc.
The European Central Bank’s quantitative easing program is ‘getting off to a good start’ and ‘meeting up to expectations,’ according to Bloomberg Intelligence economist David Powell.
Euro gains will be potentially short-lived however, with renewed anxieties regarding a Greek exit from the Eurozone. With Greece seemingly unable to please creditors, and with Germany still making life difficult for the debt-riddled nation, the potential for a referendum is growing ever stronger.
‘Maintaining the unity of the anti-bailout coalition, while striking a deal which would ease the immense pressure on the economy, is proving to be almost a ‘Mission Impossible,’’ said George Pagoulatos, a professor of European politics and economy at the Athens University of Economics and Business.
‘If we were to hold a referendum tomorrow with the question, ‘do you want your dignity or a continuation of this unworthy policy,’ then everyone would choose dignity regardless of difficulties that would accompany that decision,’ Tsipras told Der Spiegel Magazine in an interview published Saturday.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0833 today.
US Dollar (USD) Exchange Rate Softens as Traders Lock Profits
Friday’s very impressive US jobs data, which saw Non-Farm Payrolls increase and unemployment fall, caused the US Dollar to rally versus all of its most traded currency rivals. This, in turn, opened up some attractive selling positions as traders sought to lock in profits.
The positive labour market data also fuelled speculation that the Federal Reserve will be the first major central bank to hike rates. The ‘bumper US payrolls report suggests the US central bank looks likely to remove the key word ‘patience’ [from the guidance it will issue] at its March meeting and raise rates around mid-year’, said analysts at ANZ.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate
With issues surrounding Greece weighing on external investment, and with several Fed officials making statements on Monday, the Euro to US Dollar (EUR/USD) exchange rate is likely to fluctuate over the course of Monday’s trade.
Tuesday should see dampened EUR/USD volatility due to a lack of influential, market moving data pertaining to both the US and Europe.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.0900 today.