EUR/USD: Sticking to a bearish bias - MUFG
|Lee Hardman, currency analyst at MUFG Bank, expect the EUR/USD pair to trade in a range between 1.1050 and 1.1350 next week. They hold a bearish bias on the Euro against the US dollar.
Key Quotes
“The euro tested the bottom of its recent trading range against the US dollar between 1.1100 and 1.1400 following today’s ECB policy meeting. The strong signal from the ECB that they are planning a package of easing measures as soon as at their next policy meeting in September should help to keep the euro under downward pressure in the coming months.”
“While the ECB disappointed expectations for an imminent rate cut, they did still signal that rate cuts are coming soon and could be accompanied by a tiered reserve remuneration system. The ECB is hoping that expectations for future easing will outweigh the lack of action today. It leaves the euro subject to some upside risk in the week ahead if the Fed then delivers a larger than expected 50 basis point rate cut.”
“We believe the risk of a larger Fed rate cut has diminished recently. The recent agreement to extend the US debt ceiling, the resumption of US-China trade talks, and firmer US data flow have eased downside risks for the US dollar. In these circumstances, we are sticking to our bearish bias for EUR/USD.”
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