The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.77% on Friday afternoon.
Once Greece managed to repay the International Monetary Fund (IMF) the initial loan repayment on Thursday, traders breathed a sigh of relief. However, concern that Athens has run out of options and will default on further payments has seen decreasing demand for the shared currency. To add to the sense of danger on the horizon, creditors have rejected Greece’s latest reform program, giving the cash-strapped nation just six working days to find a utilitarian solution.
The US Dollar, meanwhile, strengthened versus many of its most traded currency rivals thanks to the hangover from positive labour market data on Thursday. Also aiding the ‘Greenback’ (USD) appreciation is dampened market sentiment as the tensions in Greece hinder trader risk-appetite.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0604.
Euro (EUR) Exchange Rate Softens amid Greek Woes
Although the European Central Bank (ECB) granted Greece an emergency loan, this is seen to only prolong the inevitable rather than offer a concrete solution. Given that Athens waited until the last minute to repay the IMF the initial loan repayment, most speculate that they will not find the requisite funds to pay the rest of their extensive loan agreements.
Creditors, once again, rejected Greece’s reform proposals and have now only given them a deadline of six working days to find a solution that benefits all parties involved. Should they fail to find a compromise, the likelihood for a Greek exit from the Eurozone will be amplified significantly.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low today of 1.0586.
US Dollar (USD) Exchange Rate Strengthens on Positive US Data
With opinions divided as to whether Greece will ultimately stay as part of the Eurozone or not, trader risk-appetite dampened significantly. As a result, demand for safe-haven assets such as the US Dollar increased significantly.
Also aiding the US Dollar appreciation was better-than-expected labour market data on Thursday. Given that the Federal Reserve has stated that improved labour data was one of the prerequisites to increasing the benchmark interest rate, the results buoyed rate hawks after a recent succession of weak data results.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Losses
Given that there is a complete absence of European economic data, and with market sentiment dampened, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold losses for the remainder of Friday’s European session. With several Federal Reserve officials making speeches later on Friday, there is the potential for US Dollar fluctuations.
The Euro to US Dollar (EUR/USD) exchange rate reached a high of 1.0684 today.
