Yesterday (24/6), EUR/USD rebounded slightly, when Greece negotiation has not made much progresses. During the session, the price votiled in a quite narrow range with a the highest point at $1.12340, then closed at $1.12030, up 0.6% from opening price ($1.11662).
Currently, at 5:41 p.m. GMT+7, EUR/USD is trading at $1.11933.
Today is the 3rd day of European finance ministers’ meeting, as well as the start of EU summit. Greek debt crisis is still the main topic of the conversation. Yesterday (24/6), Greece’s proposal was rejected, while the creditor has sent Greece a new request in order to remove deadlock on negotiations. Thus, it can be seen that two sides are still making great efforts to be able to reach an agreement to help Greece escape the risk of default and Grexit.
Greece’s debt crisis has lasted for many years. However, until the present time, whether Grexit have enough influence to cause great volatility in the market? Grexit’s influnce may be contrary to the judgment of the majority of investors. If Greece left, the Euro will go down in the short term as common sentiment. But in the long term Eurozone escape the “burdening” Greece and rebuild its position and the euro will rise again.
Hence, EUR/USD will go down today with high volatility, primarily driven by concerns about instability with no more news from Greece. Investment flows can run into other markets such as the emerging economies in Asia.
In addition, there are several factors negatively impact the EUR/USD as:
Yesterday (24/6), US Department of Commerce reported that I/2015 GDP growth decreased 0.2% compared to the same period last year, better than last month’s forecast (-0.7%). Economic growth begins to regain momentum in the second quarter of this year with favorable weather and fewer strikes.
Consumer (accounting for over 60% of US GDP), recorded a growth of 2.1% in the first quarter, compared with estimation of 1.8%; while the real estate market is better, increasing the value of houses. Personal savings jumped to $720.2 in the first 3 months of 2015. Moreover, the labor tightening is a sign of inproving wage growth, so the consumers can boost spending more in second quarter. These positive figures strengthen the Federal Reserve rate hike earlier in this year and support for dollar.
Tonight, the US will release data about unemployment claims, personal income, flash PMI service sector, along with the speech of the Fed Governor Jerome Powell. If the data is positive, it’s likely that Powell’s speech will support for dollar, which dragged EUR/USD down.
However, EUR/USD may increase on the impact of the following factors:
Americans do not want to let Greece go, because if Grexit happen, position of the US in the world would be affected cause Greece belongs to EU, biggest ally of the US. In the G7 summit, President Barack Obama has warned Greece and its creditors should accelerate the negotiations to reach an agreement. To protect Greece and its European allies being vulnerable against the emerging countries of Asia (China, India) and new “union” Russian-Chinese, temporarily US can print money to buy Euro to maintain reasonable exchange rates, supporting the competitiveness of US exports, amid dollar is too strong. EUR/USD may go up in the short term.
If there is more positive news from Greece, the euro may fly up in the near term.
Forecast: EUR/USD is likely to fall, towards $1.11163.