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Euro to US Dollar (EUR/USD) Exchange Rate Higher Ahead of Federal Reserve Minutes Release, Greece/Russia Talks in Focus

The Euro to US Dollar (EUR/USD) exchange rate strengthened on Wednesday as the US currency came under broad pressure ahead of the release of the Federal Reserve’s latest policy meeting minutes.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a session high of 1.0888

Economists are widely predicting that the minutes of the March Federal Reserve policy meeting will show that Fed policy makers are edging away from raising interest rates in the summer as had been previously forecast and are now moving toward a rate hike occurring at the end of the year. Expectations for a dovish set of minutes are high following the release of a string of disappointing economic data releases, the latest of which was last week’s worse-than-forecast jobs data.

‘If the economy improves faster or inflation increases more than expected, it will be appropriate to raise rates faster. And if economic performance disappoints or inflation remains lower than expected, it will be appropriate to delay liftoff or raise rates more slowly thereafter. There is no risk-free path for monetary policy,’ said Jerome Powell, a governor at the Federal Reserve.

The Euro meanwhile took advantage of the US Dollar’s weakness to advance by more than 0.30% despite the release of disappointing German factory orders and Eurozone retail sales data.

Greece/Russia Talks in Focus

The Euro could be affected by the closely watched meeting between Greece and Russia. Observers have been speculating whether a deal could be reached between Athens and Moscow to help alleviate Greece’s economic suffering. With the European Union not being very cooperative so far on that front, speculation has been building that Greece could fall under Russian influence.

The meeting has already seen something of an easing in tensions, as Moscow said that it is preparing to lift an embargo on Greek food imports.

‘It’s perfectly normal for talks to take place but I would urgently warn against getting closer. We are in the middle of final negotiations for financing for Greece and I don’t believe that a good game is being played here,’ said Austrian finance minister Hans Joerg Schelling.

The likelihood of Russia bailing out Greece however is highly unlikely as the Russian economy is under severe pressure itself due to western sanctions, which were imposed after the nation annexed the Crimea, and was accused of aiding pro-Russian separatists in the east of Ukraine.

The Euro could make further gains on Thursday if the latest German balance of trade and industrial production data comes in positively.