The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.43% on Tuesday morning.
The single currency has seen significant volatility on Tuesday morning after positive news from the European Central Bank (ECB) was counteracted by disappointing domestic data. ECB President Mario Draghi’s 2012 bond-buying program was backed by European courts, but German economic sentiment dived.
The US Dollar, meanwhile, edged higher versus many of its major rivals despite producing mixed results from domestic data publications. This is mostly the result of increased demand for safe-haven assets as geopolitical tensions in Europe reach boiling point.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1229.
Euro (EUR) Exchange Rate Forecast to Soften against the ‘Buck’ (USD) as Euro-Area Economic Sentiment Cools
In September 2012 bets multiplied that the Eurozone would break apart and ECB President Mario Draghi responded by stating that he would do ‘whatever it takes’ to save the currency bloc. Draghi announced the Outright Monetary Transactions (OMT) program as a method for solidifying the Eurozone. The European Union’s highest court has now ruled in favour of the program, giving Draghi additional weaponry to fight any crisis which may occur.
The shared currency advanced in response to this news, but the gains were short-lived after domestic data printed disappointingly. June’s Eurozone Economic Sentiment Survey dropped from 61.2 to 53.7. June’s German ZEW Current Situation Survey dropped beyond the median market forecast to 62.9, and the German ZEW Survey for Economic Sentiment also dropped beyond expectations to 31.5.
‘June’s sharp fall in ZEW investor sentiment suggests that the German recovery is suffering from fears about the impact of the Greek crisis,’ said Jennifer McKeown, senior European economist at Capital Economics. ‘And there is clearly a risk of a more rapid slowdown if the Greek crisis is not resolved quickly,’ McKeown added.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1237 today.
US Dollar (USD) Exchange Rate Forecast to Strengthen against the Common Currency on Safe-haven Demand
The US Dollar is generally trending in a weak position after data on Monday showed US manufacturing and industrial production unexpectedly declined in May. The US asset edged higher on Monday , however, which is likely to be the result of traders seeking safe-haven assets amid geopolitical upheaval in Europe.
US data produced varied results on Tuesday. May’s Housing Starts saw a significant declination of -11.1%; failing to meet with the median market forecast -4.0%. However, May’s Building Permits advanced by 11.8%; bettering the market consensus of a -3.5% decline.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains ahead of Eurozone Inflation Data, FOMC Interest Rate Announcement
Wednesday ought to see volatility for the Euro to US Dollar (EUR/USD) exchange rate with Eurozone inflation data due for publication. However, the Federal Open Market Committee (FOMC) interest rate decision will have the greatest impact, although not occurring until later on Wednesday. Although most analysts don’t predict any changes from the FOMC, any accompanying statement may give clues as to the timing of a benchmark rate increase.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1330 today.
