Last Friday (31st July), the pair EUR/USD increased after 3 consecutive days of decline. Ending the session, the price closed at $1.09824, up 0.5% compared to the opening price of $1.09306. Meanwhile, the fluctuation intraday between the high price of $1.11133 and the low price of $1.09198 is 1.8%, showing that this pair had strong fluctuation.
The situation of the Greek debt negotiations still embraces investor sentiment. Meanwhile, economic sentiment in the Euro zone rose unexpectedly in July from 103.5 to 104. 7. The psychology of managers and consumers improves the economy and supports the Euro rose in short-term.
Last Friday, Finance Minister Euclid Tsakalotos met representatives of the creditors in order to discuss about the austerity measures in exchange for bailout package. Tsakalotos highlighted the “atmosphere” of positive negotiations, in stark contrast to his predecessor, Yanis Varoufakis, who frequently clashed with European partners and has resigned after tensions escalated. The upbeat negotiation supports the Euro to go up.
In the long term, however, the pair EUR/USD remains pressured downward trend by the difference in monetary policy between 2 central banks. While the US Federal Reserve System (Fed) expresses their confidence in the strong recovery of the economy, helping this financial institution will soon raise interest rates this year, the European Central Bank (ECB) maintains its huge economic stimulus program, pumping about 60 billion euros each month until September 2016.
Greece’s debt crisis threatens Euro zone’s economic and financial stability, that makes the Euro devalued recently. Greek prime minister Alexis Tsipras faced numerous difficulties in negotiations with creditors in order to reach the 3rd financial aid package which worths 86 billion Euro and the “impossible mission” of recovering up Greek economy. Today, the Greek stock market reopens after 5-week suspened. Greece is facing the ECB’s bond debt that matures on 20th August.
In the US, the US Labor Department last week announced the index of labor costs, which measures the labor market rose 0.2% in the second quarter. It was the smallest increase in personal streak in the second quarter since 1982. Previously t in the first quarter, the figure was 0.7%. However, such low growth does little influence to the expect of Fed rate hike this year. The labor market is still rapidly approaching full employment.
Regarding economic data, there is PMI manufacturing index of the US and the Euro zone. This data may affect the volatility of the currency today.
Currently 2:20 GMT+7, the pair is trading at $1.09833, up 0.1% compared with the opening price $ 1.09705.
Forecast: EUR/USD is still in the bearish trend. It’s likely to fall today, may reach $1.09000 and continue dropping to the area of $1.08100. However, affected by the economic data, it can not be excluded the possibility that the pair will climb up to $ 1.10700.