The two major factors that affected the EUR/USD values on Friday were the Fed announcement of no June rates hike and the ongoing stalemate situation in the negotiations between Greece and its creditors.
The USD was further depressed by the Federal Reserve’s indication that any increase in rates would be a very gradual exercise.
Friday saw the EUR/USD at a low of 1.1293 although there was a rebound later to 1.1352 as the greenback reacted to the news from the Fed. EUR values seem to be unaffected by the daily happenings around the Greek financial crisis while trader concerns seem to be directed more towards the final solution to the problems with the June 30 deadline looming.
EUR/USD values are probably going be more affected by the plethora of financial data due during this week as comparisons are made between the forecast numbers and actual data. These figures are keenly anticipated after Fed Chair Janet Yellen announced a lowering of the expected growth of the U.S. economy while acknowledging that the economy had “expanded moderately” during the second quarter.
The first important economic data report due today is the existing home sales for May with analysts expecting growth to 5.25 million from 5.04 million in April. Tuesday sees durable goods orders data where little change is forecast and new home sales where a moderate increase to 525,000 from the previous 517,000 is expected.
Wednesday is the important one with GDP figures due; here the expectation is a drop from the previous -0.7% to -0.2%. Thursday, a flurry of reports that will all impact on USD values, include weekly jobless claims, personal Income, consumer spending and core Inflation numbers are due. Very little change is expected in these with either flat or very moderate changes forecast. The consumer sentiment report due on Friday is also expected to remain unchanged at 94.6.
The week in Europe starts with a meeting in Brussels where European leaders are set to hold emergency talks on the Greek crisis. Tuesday will see the release of euro zone private sector activity numbers.
Meanwhile, on Wednesday, the Ifo Institute releases its report on the German business climate followed by a similar report from the Gfk Group on the same day.
Hovering in the background is the lack of any firm indication of the direction the Greek crisis can be expected to take. A Greek default could herald an exit from the euro zone and possibly from the European Union which will certainly have a big impact on EUR/USD values.
The U.S. dollar index ended the week at 94.32, down by 1.02% to record its third weekly decline. This index measures U.S dollar strength against a trade weighted basket of six currencies. The dollar will remain under pressure while there is continuing uncertainty regarding the payment of the $1.5 billion due to the IMF on 30 June by Greece.
MT4 Chart: EUR/USD