Yesterday, EUR/USD rose for 4 consecutive days, closing at $1.10173, up 0.5% compared with the opening price $1.09620.
Weaken dollar on mixed comments about US economy: While the vice president of Fed Stanley Fischer said inflation remains temporarily very low partly due to falling commodity prices, the economy has almost reached full employment. The Atlanta Fed President Dennis Lockhart said the economic conditions of the US have largely returned to normal levels and a rate hike is coming soon. However, inflation is now at 1.3%, below the target 2%, dollar is weakening, pushing EUR/USD to $1.10404.
4 of the 10 voting members of the FOMC has publicly supported September tightening, including Lockhart, governors Jerome Powell, San Francisco Fed President John Williams and Jeffrey Lacker of Richmond.
Chicago Fed Charles Evans is the only member to oppose a rate hike in September, while president William Dudley of New York and Lael Brainard said that external risks and other issues could slow the recovery of the US economy.
Prospects of Fed’s tightening in is pushing EUR/USD to fall further.
In the long term, the EUR/USD remains under pressure of different monetary policy between the two central banks. While the Fed is confident in the strong recovery of the economy, boosting a rate hike this year, the European Central Bank (ECB) maintains stimulus program until September 2016.
Today, the pair will be affected by the news surrounding the Greek debt negotiations. This nation and international creditors have come to an agreement on financial targets, Greece will achieve a budget surplus since 2016.
Greece wants to achieve debt deal before 3.5 billion euros debt is set to be paid for the ECB. Meanwhile, Germany expressed his desire to quickly end the Greek debt negotiations.
Greece expects to reach an agreement with creditors today so that the National Assembly may adopt the bill as raising taxes as required by international creditors – ECB, IMF, EC and the ESM before EU financial minister meeting on August 14th.
The result of the negotiation will affect the euro
The pair is trading at $1.09979 at 2:10 pm GMT+7, down 0.2% compared with the opening price $1.10174.
Forecast: The pair remains bearish, likely fall to $1.0900. However, positive outcome from Greek may support for it to climb to $1.10700.