Wednesday morning saw the Euro to US Dollar (EUR/USD) exchange rate trending in the region of 1.1466.
Earlier… The Euro to US Dollar (EUR/USD) exchange rate rallied by around 1.18% on Tuesday afternoon. After tensions regarding a Grexit eased, the shared currency strengthened versus many of its major peers. If the ‘troika’ of international lenders disbands (as rumours suggest it might) it will make it easier for the European Central Bank (ECB) and Greece to find a compromise with regards to the massive Greek national debt. The US Dollar, meanwhile, softened versus the majority of its most traded currency rivals after Factory Orders data declined beyond expectations. The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1350.
Euro (EUR) Exchange Rate Advances despite Poor Data
Although the Eurozone Produce Price Index declined on both a yearly and monthly basis in December, the shared currency strengthened versus most of its competitors. The surge can be attributed to the ECB contemplating leaving the troika of international lenders that govern the Greek bailout. ‘The ECJ advocate-general’s report looks quite categorical and would seem to end the ECB’s participation in the EU-IMF troika in the case of an OMT activation,’ industry expert Olli Rehn told the Financial Times. ‘This would probably mean the beginning of the end of the troika in its current form, which would in turn push the Eurozone to yet another important institutional reform.’ The disbanded troika will be a massive plus for Greece as they will only be dealing with the ECB, making it easier to find a compromise with regards to paying off their huge national debt. The Euro to US Dollar (EUR/USD) exchange rate dropped to a low today of 1.1311.
US Dollar (USD) Exchange Rate Holding Steady ahead of Factory Orders Data
Although US data showed manufacturing cooled significantly on Monday, the US Dollar is maintaining a position of strength versus many of its major rivals. This is as a result of positive sentiment towards the Fed which looks to be the only major central bank considering tightening monetary policy in 2015. However, after domestic data printed poorly, the Us Dollar softened versus many of its major rivals. Factory Orders declined beyond the median market forecast of a drop from -1.7% to -2.4%, with the actual result dropping to -3.4%.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Strengthen
Given that US data is expected to soften, and with easing tensions regarding the potential Grexit, the Euro to US Dollar (EUR/USD) exchange rate is likely to strengthen on Tuesday afternoon. The Euro to US Dollar (EUR/USD) exchange rate advanced to a high today of 1.1355.