The Euro (EUR) spent much of the day on the rise against the major currencies yesterday, clawing back some of the ground it had lost after Greek and Portuguese troubles and the tragic Paris attacks pushed the common currency down. The current strength of the US Dollar (USD) leaves little room for appreciation, with traders realising their gains.
EUR/USD Exchange Rate News: Euro Gains as Trader Profit Taking Weakens US Dollar
The resolution of the Greek crisis allowed the Euro to gain ground on the ‘Buck’, which led to a bout of profit taking as the pairing recovered slightly from recent lows. Despite the continuing Portuguese uncertainty and France’s declaration that it will overshoot EU budget targets for 2016 as it increases spending on defence, the Euro rallied yesterday to gain ground against most of the major currencies.
The EUR/USD exchange rate is currently trending up 0.2% around 1.0687.
USD/EUR Exchange Rate Down Despite Fed Rate Minutes Furthering Hopes of 2015 Rate Hike
The USD/EUR exchange rate had been kept strong by the anticipation surrounding the Federal Open Market Committee’s (FOMC) December meeting. Interest rates have been on hold near zero for seven years, but recent economic data has suggested that the Fed could be ready for a raise. The awaited minutes from the October gathering have shown that policymakers are waiting to see what the data says ahead of the next rate hike decision: since the majority of data has been positive, including the Non-Farm Payrolls, Retail Sales and Consumer Price Index, the conditions are set for the Fed to act.
However, because investors have anticipated a more hawkish stance for several days now, the US Dollar has been strong in the run up to the release of the minutes. The possibility of a rate hike has already been priced in to the strong ‘Buck’ and lessening demand as investors realise their gains have left it vulnerable to a rebounding Euro.
The USD/EUR exchange rate is currently trending down between 0.9330 and 0.9371.
EUR/USD Exchange Rate Forecast: Common Currency Could Fall on Finland Eurozone Membership Questions
Another source of Eurozone uncertainty has revealed itself in Finland, as a petition calling for the parliament to debate Finnish Eurozone membership hits the required 50,000 signatures. The Finnish people weren’t given a referendum vote on whether or not to join the single currency, which replaced the local currency, the markka, in 2002. Surveys show that 64% of Finns still support the Euro, although that represents a 5% drop Year-on-Year (YoY).
The petition is triggered by discontent over the country’s poor economic performance. The Finnish economy is performing the worst out of all the Eurozone countries, behind even debt-stricken Greece and Portugal, having contracted for four consecutive years. ‘Since 2008 the Swedish economy has grown by 8%, while ours has shrunk by 6%,’ said Paavo Vayrynen, one of Finland’s members of European Parliament (MEP). ‘Now is a good time to have a wider debate whether we should continue in the Eurozone or not.’
Although Greek exit (‘Grexit’) fears have faded, the threat of a ‘Fixit’ is sure to further weaken the common currency as traders question the strength of the currency bloc.
The EUR/USD exchange rate is currently trading between 1.0665 and 1.0718.
