The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.36% on Monday morning.
As we near the Eurogorup meeting which will strive to find a utilitarian resolution to the Greek debt crisis, the shared currency is edging higher versus most of its major peers. This is an indication that traders are optimistic that the meeting will be successful.
The US Dollar, meanwhile, is generally holding steady versus the majority of its most traded currency rivals thanks to a lack of domestic data to drive changes. Fears that a recent succession of poor economic data results has caused traders to speculate that the Federal Reserve will delay a rate hike for a considerable time.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1416.
At the close of last week, the Euro to US Dollar (EUR/USD) exchange rate was trending within a range of 1.1377 and 1.1443.
Euro (EUR) Exchange Rate Forecast to Fluctuate on Geopolitical Developments
As was the case last week, Euro movement is unlikely to be heavily impacted by domestic data. This is because developments regarding Greece’s place in the Eurozone and the nation’s debt crisis is dominating trader focus.
Perhaps the most significant data publication, with the most potential to drive single currency volatility, will be the German Economic Sentiment Survey. The previous figure reached an 11-month high despite many troubling issues, so most expect sentiment to have continued strengthening in February.
Clemens Fuest, ZEW president, said of the previous economic sentiment data stated; ‘News of the upcoming parliamentary elections in Greece and the Swiss National Bank’s decision to abandon the euro cap on the franc’s value have led to strong stock market fluctuations. However, this seems not to have impressed ZEW’s financial market experts with regard to their expectations on the German economy. Instead, decreasing crude oil prices and a depreciating Euro have contributed to a further gain of the indicator.’
For those invested in the common currency; Eurozone Economic Sentiment, Eurozone Consumer Confidence, German Manufacturing PMI, German Services PMI, German Composite PMI, Eurozone Manufacturing PMI, Eurozone Services PMI and Eurozone Composite PMI have the potential to provoke movement.
US Dollar (USD) Exchange Rate Forecast to Soften
If the past week is anything to go by, the US Dollar is likely to soften as domestic data is promoting a sense that the Federal Reserve will delay a benchmark rate hike.
Of most significance, in terms of the potential to provoke changes, will be the publication of minutes from the most recent Federal Open Market Committee meeting. Hawks will be scrutinising the publication closely in the hope of an indication as to the timing of a rate revision.
For those trading with the ‘Buck’ (USD): NAHB Housing Market Index, Net Long-term TIC Flows, Mortgage Foreclosures, Mortgage Delinquencies, Mortgage Applications, Housing Starts, Building Permits, Industrial Production, Manufacturing Production, Initial Jobless Claims, Philadelphia Fed, Leading Indicators and the US Manufacturing PMI all have the potential to provoke US volatility.
With many data publications printing poorly, rate hawks will be hoping for a reversal in fortune for US data in order to pressure the Federal Reserve into hiking rates.
Wednesday will be key for those invested in the US Dollar with several influential data publications with the potential to provoke changes.
The common currency is likely to be subject to geopolitical developments, with Grexit fears weighing heavily on demand for the shared currency.
On Sunday the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1410