Last week the Euro to US Dollar (EUR/USD) exchange rate experienced a fairly volatile week of trading as concerns regarding Greece’s place in the Eurozone dictated demand for the Euro.
Meanwhile, the ‘Greenback’ came under pressure following the publication of unexpectedly dovish meeting minutes from the FOMC.
The minutes implied that the current global deflationary climate could prevent the Fed from increasing borrowing costs as early as previously projected. As rate hike bets have been supporting the US Dollar’s uptrend in recent months, the report saw the currency decline.
Accordingly, the EUR/USD pairing moved between lows of 1.1288 and highs of 1.1441 over the five days.
At the beginning of this week all eyes remained trained on Greece as the nation presented a list of proposed reforms to its creditors.
Approval of the measures outlined would give the Hellenic nation a four-month extension of its current debt programme and buy it more time to negotiate.
On Monday the Euro softened modestly against its US peer as the German IFO Business Climate/Current Assessment/Expectations indexes printed below forecast levels.
However, EUR/USD losses were limited as the US released concerning Existing Home Sales figures and a less-than-impressive Dallas Fed Manufacturing Activity gauge.
The common currency began trading on Tuesday under a little pressure as the Eurogroup assessed whether or not the Greek bailout should be extended.
Although not all sides were impressed with the compromises put forward by Greece (with ECB President Mario Draghi and IMF Managing Director Christine Lagarde voicing particular concerns) the list was approved.
The short-term stability this development will provide lent the Euro a little support, but the common currency remained trading in a tight range with the US Dollar.
The ‘Greenback’, meanwhile, was putting on a patchy performance following the release of a mixed bag of US reports.
While US Services and Composite Purchasing Manager’s Indexes exceeded expectations, a gauge of US Consumer Confidence declined by more-than-projected.
Federal Reserve Chairwoman Janet Yellen also used her testimony to Congress to imply that the Fed must adopt a flexible approach to fiscal policy and make alterations in accordance with global and domestic economic developments.
As the week progresses, fluctuations in the Euro to US Dollar currency pair could be caused by further speeches from major central bank officials and influential economic reports from both the US and Eurozone.
The US inflation report – scheduled for publication on Thursday – will be particularly interesting.
If inflation is shown to have fallen by more-than-expected and pushes back Federal Reserve interest rate hike expectations, the US Dollar could be pressured lower.
During the European session the Euro to US Dollar (EUR/USD) exchange rate was trading in the region of 1.1340 – unchanged from the day’s opening levels.