The Euro to US Dollar (EUR/USD) exchange rate rallied from earlier losses on Monday after the Bundesbank monthly report said that the German economy would continue to grow strongly in the early part of this year.
The Euro to US Dollar exchange rate touched a session high of 1.1001
Earlier in the session, the Euro was under pressure against the ‘Greenback’ as concerns over the Greek situation prevented the single currency from taking advantage of its best weekly performance since the latter part of 2011.
Greek Prime Minister Alexis Tsipras is due to meet with German Chancellor Angela Merkel later in the day to hold crunch talks on the situation in the debt-ridden nation. Greece must deliver new reform measures to its creditors by the end of the week in order to receive much needed bailout funds. Economists are predicting that the nation could run out of cash by the start of April, an event that could see Greece be forced out of the Eurozone.
The Euro received some support after Greek authorities said on Friday that they were moving towards meeting the requirements of international creditors on a more detailed reform plan in order to secure the additional bailout funds required to prevent the country’s bankruptcy.
Concerns over a possible Grexit were eased slightly as the session progressed as the German Bundesbank said that the Eurozone should be able to withstand the impacts of the insolvency of a member state.
Bundesbank comments support Euro (EUR) exchange rate
The Bundesbank also supported the Euro by saying that the German economy (the Eurozone’s largest) is expected to experience robust growth in the early stages of this year as it continues the strong rate of expansion seen at the end of 2014.
‘The German economy will have grown strongly in the first quarter of the year after a surprisingly strong expansion at the end of 2014. There are also signs of a continued vigorous upward economic movement in the second quarter,’ said the bank in its report.
The US Dollar meanwhile remained under pressure from market uncertainty as to when the Federal Reserve will begin to hike interest rates. Last week, the US Central bank downgraded its forecasts for economic growth and inflation, and lowered its interest rate projections.
The US Dollar could regain some ground later in the session if the latest US existing home sales data comes in positively. Also of interest will be a speech due to be delivered by European Central Bank Mario Draghi.