EUR/USD: Bullish bias remains in place – MUFG
|Analysts at MUFG Bank, see the EUR/USD pair trading in the 1.1050/1.1650 range, with the Euro receiving support from a Brexit deal and Federal Reserve rate cuts.
Key Quotes:
“The Euro has turned notably higher fuelled by developments in the two key global macro issues that have weighed on the euro this year – the US-China trade conflict and Brexit uncertainties. With the US soon entering into presidential election campaigning mode, there is building expectations of a partial deal being agreed with China at the APEC meeting in Chile on 16th-17th November. Since the sharp escalation in the US-China trade conflict in September 2018 (when the US imposed tariffs on USD 200bn worth of China imports) EUR/USD has dropped from 1.1800 to 1.0900. An easing of the conflict would likely spark some further retracement in that drop. A key resistance trend-line (Sept 2018 and June 2019 highs) comes in at 1.1200 on around 15th November – a possible key moment in the trade conflict.”
“Reinforcing the support for EUR/USD is the confirmation of the Brexit deal passing through parliament on 22nd October. This is more of a key issue for GBP but nonetheless has positive implications for the euro as well. A no-deal Brexit risk was partially priced and while now close to fully removed, there is scope for some further near-term EUR buying.”
“EUR/USD will derive support from the Fed decision next week to cut the fed funds rate for the third time. The decision is more finely balanced than the first two but we believe the lack of effort to alter market expectations of a cut prior to the start of the blackout period points to another cut being agreed. We also doubt the FOMC will be confident enough to signal firmly an end to the easing, which will likely weigh on the US dollar over the short-term.”
“We hold a bullish bias for EUR/USD given it has been some time since we’ve had a correction higher and positioning may allow for a greater short-term move higher.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.