Euro to US Dollar Exchange Rate News: EUR/USD Reverses Dovish Federal Reserve Statement Gains, EUR/GBP Lower

June 18, 2015 - Written by Admin

STORY LINK Euro to US Dollar Exchange Rate News: EUR/USD Reverses Dovish Federal Reserve Statement Gains, EUR/GBP Lower

EUR to USD, GBP Exchange Rates Softer as Greek Drama Escalates

While the Euro managed to advance on the US Dollar in the wake of the FOMC's slightly dovish policy statement, the common currency edged lower against the North American asset on Friday after the latest round of Greek bailout discussions broke down after only an hour. It was reported that the proposals put forward by the Greek finance minister were not well received so the odds of a Grexit rose and demand for the Euro fell.

Earlier...

Pared Back US Rate Hike Forecasts See EUR to USD Exchange Rate Strengthen Today

The Euro to US Dollar (EUR/USD) exchange rate strengthened despite the ongoing worries surrounding the Greek debt crisis. The gains came after the US Federal Reserve delivered a dovish policy statement, which prompted investors to push back their expectations as to when an interest rate rise will occur.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a session high of 1.1418

The US Dollar exchange rate weakened against the Euro and other major peers after the Federal Reserve announced that it had lowered both its US growth and interest rate forecasts. The move prompted investors to lower their bets that interest rates will be hiked by the end of the year.

Comments made by Federal Reserve Chair Janet Yellen added to the weakness of the US Dollar as she said; ‘Economic conditions do not yet warrant an increase in the federal funds rate. My colleagues and I would like to see more decisive evidence that a moderate pace of economic growth will be sustained. Wage growth remains relatively subdued. So although progress clearly has been achieved, room for further improvement remains.’

FOMC Decision Unanimous, Greek Situation Could Prevent Rate Rises and Weigh on USD/EUR, USD/GBP Exchange Rate Trading

Fed policymakers also voted unanimously to leave interest rates unchanged at 0% during the meeting. They also sharply lowered their growth estimate this year, from a range of 2.35 to 2.7% estimated in March to a range of 1.8% to 2%. The downgrade takes into account the economic contraction seen in the January-March quarter which suffered from harsh winter weather.

‘While the decision not to raise interest rates this time was expected, the decision to cut its GDP forecast for the second time in a row suggested to the markets that US economic growth is still less than expected. This cut in the GDP forecast pretty much rules out an interest rate hike in July and makes September unlikely unless the economy turns around in a big way soon,’ said an analyst.

Euro (EUR) Exchange Rate under Pressure from Greece Worries, EUR/GBP, EUR/USD, EUR/AUD Exchange Rates to Fall?

The Euro remains under considerable pressure against many of its most traded peers as fears continue to grow that no deal will be reached between Greece and its creditors. Finance ministers from across the Eurozone are due to gather in Luxembourg today to discuss the issue, but hopes are not high that a deal will be reached between Athens and its creditors. Fears of the possible implementation of capital controls and the end to Greece’s membership of the EU are now rising.

The Euro could make further gains against the US Dollar if the latest US inflation data disappoints.

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