Euro to US Dollar Exchange Rate Forecast to Advance after Greece Submitted New Reform Proposal

Modified: Thursday, 2 April 2015 16:35 BST - Written by David Woodsmith

STORY LINK Euro to US Dollar Exchange Rate Forecast to Advance after Greece Submitted New Reform Proposal

The Euro to US Dollar exchange rate rallied by around 0.80% during Thursday’s European session. After Greece submitted the latest version of its reform proposal, the Euro strengthened versus the majority of its most traded currency rivals. This shows that many traders are confident that this proposal will be accepted by creditors, especially given that this is one of many revisions. The US Dollar, meanwhile, edged lower versus many of its major peers as a result of the hangover from disappointing manufacturing data.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0858. Although there was a complete absence of European economic data on Thursday, the shared currency strengthened versus the majority of its major rivals. This can be attributed to easing fears of a Grexit after Athens submitted yet another revision to their reform proposal. ‘It is necessary now, without further delay to turn a corner on the mistakes of the past and to forge a new relationship between member states, a relationship based on solidarity, resolve, mutual respect,’ said the proposal. However, not everyone believes the reform proposal will be accepted. Former Greek Prime Minister Antonis Samaras said; ‘I see a lot of words, a lot of theory, a lot of lies, and no action...All of these add up to a big question mark. If they ideologically decide they won’t abide by this agreement, then you may have a default.’

Meanwhile, the US Dollar softened versus most of its major competitors despite relatively positive labour market data. Initial Jobless Claims saw 286,000 claimants which was below the median market forecast of 285,000. Continuing Claims showed 2,325,000 people continued to claim financial aid which again was below the market consensus figure of 2,405,000. Additionally, US Trade Balance saw the deficit narrow from -$42.7 billion to -$35.4 billion. The ‘Greenback’ (USD) declination is as a result of the hangover from Wednesday’s disappointing ISM manufacturing data.

Lack of European economic data should see movement dictated by geopolitics. The situation in Greece notwithstanding, any news from the European Central Bank with regards to quantitative easing may provoke single currency volatility.

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