The Euro to US Dollar (EUR/USD) exchange rate declined by around -0.50% on Wednesday morning.
With the start of the European Central Bank’s quantitative easing program drawing ever closer, the Euro slumped versus its major peers. The declination can be attributed to mounting speculation that the ECB will be unable top source the bonds to finance the €1 trillion injection.
The US Dollar, meanwhile, strengthened versus many of its most traded currency competitors thanks to predictions that the Federal Reserve Beige Book will show progressive US economic growth.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1125.
The Euro to US Dollar (EUR/USD) exchange rate was trending within a narrow range on Tuesday afternoon.
After European Commission Vice President Valdis Dombrovskis warned that Greece may require another bailout deal when the current program ends, the shared currency softened versus the majority of its most traded currency rivals. The declination was slowed, however, thanks to better-than-expected German retail sales growth.
The US Dollar, meanwhile, declined versus many of its major peers thanks to the hangover from disappointing data on Monday. A lack of influential data on Tuesday is likely to see the ‘Buck’ (USD) continue trending lower.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1168.
Euro (EUR) Exchange Rate Declines on Dombrovskis Warning
As mentioned above, the comments from Valdis Dombrovskis caused the common currency to slide versus many of its major competitors. The recent bailout extension can be likened to a conjugal visit in which Greece is the prisoner…the situation is better for a short period but the underlying problem remains.
In response, Greek government spokesman Gavriil Sakellaridis said on Monday night: ‘The Greek government has been exploring solutions… to ensure there won’t be a single problem with repaying the IMF loan, or its funding obligations in March.’
German sales data was encouraging, however, which stymied the Euro slide a little. German Retail Sales were forecast to increase by 3.0% in January year-on-year, down from the previous annual growth of 4.8%, but the actual result showed an impressive sales increase of 5.3%. Somewhat countering this positive data, however, was the Eurozone Producer Price Index, which declined on both a monthly and yearly basis in January.
The Euro to US Dollar (EUR/USD) exchange rate has fallen to a low of 1.1152 today.
US Dollar (USD) Exchange Rate Softens on Lack of Data
Given the lack of influential data to curb the trend, the US Dollar declined versus many of its major peers on Tuesday as Monday’s data continues to weigh on demand. Improving market sentiment and demand for higher-yielding assets also contributed to the Dollar’s declination.
With the Federal Reserve stating that rate decisions would be made on a meeting-by-meeting basis, with positive data results the focus for tightening policy, many experts are delaying bets as to the timing of a rate hike. The Fed policymakers are also divided, which makes a decision more difficult.
‘Seven of the Fed’s current 17 members have now said they at least want the option of a June tightening on the table, or have pushed in general for an earlier increase amid an expectation that wages and inflation will turn higher. By contrast, there’s a dwindling core of officials who say publicly that the economy and labour markets in particular still have a long way to go — only four Fed members have in recent weeks clearly said that rate hikes won’t be appropriate until much later in the year or even into 2016,’ stated Howard Schneider, writing for Reuters.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Steady
Although ISM New York and IBD/TIPP Economic Optimism data is due later on Tuesday, the figures are unlikely to have a significant impact on US Dollar movement. Therefore, the Euro to US Dollar (EUR/USD) exchange rate is likely to hold steady for the rest of Tuesday.
Wednesday is likely to see more intense EUR/USD volatility given that Eurozone Retail Sales data and the US Non-Manufacturing Composite are due for publication.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high of 1.1212 today.