Yesterday, EUR/USD fell 0.69% from the opening price of 1.09791 to the close price of 1.10583, mainly because of Greek turmoil. Also the Fed’s statement saying that on the economy was growing and it would raise interest rates this year also made dollar rise against euro.
Currently, the price is at 1.09664 at 3:45 pm GMT + 7
Today, the euro is likely to go down mainly due to the following reasons:
- Greek negotiations still have many disagreements. The road to rescue Greece is still bumpy. There are also reports that Greece has “plan B” to bring this country to leave the Euro zone. Conflicts and prolonged negotiations will affect investor sentiment, putting downward pressure on the euro.
- Stock bubble burst caused the Chinese government to intervene by providing money to support the stock market. This will cause China to cut many other infrastructure investment, causing commodity price to fall. Commodity price declining could lead to the risk of deflation and cause the negative impact to the recovery of the European economy, making the euro fell.
- The US economy is showing signs of recovery, the Fed still intends to raise interest rates this year, combined with many uncertainties in the world (Greece, China, Brazil), this will cause the dollar and US government bonds become more attractive.
The number of unemployed in Germany rose in July 9000, this can raise concerns about Europe’s largest economy and make euro tumble.
However, the euro also rose due to the following reasons:
- The instability of the world led investors to look to bonds as a haven German safety. This will help increase demand Euro.
- Greece leaving the euro zone can be a positive signal for the euro zone economy as this block is not carry a huge burden anymore. This will help euro appreciate in the long term.
Forecast: EUR/USD may fall to 1.09061 or rise to 1.09857 rise before reversing.
Today will be the US GDP data, the EUR/USD is likely to be volatile. If the data is positive, EUR/USD may fall to 1.09061. Negative data will help EUR/USD rise to 1.10028.