EUR/USD: Dollar sell-off unlikely to be sustained – MUFG
Analysts at MUFG Bank, have the idea of a shorting the EUR/USD pair around 1.0290 with a target at 0.9900 and a stop-loss at 1.0540. They consider that European circumstances create uncertainty for the euro and market participants could start pricing in more tightening from the Federal Reserve.
Key Quotes:
“We are sceptical of the scope to move further to the upside in circumstances of still high levels of uncertainty over the near-term outlook for growth in Europe due to the declining supply of natural gas.”
“For the US dollar generally, the sell-off this week in our view will not be sustained. It is much too early for the Fed to pivot and comments from Fed officials since the CPI data suggests a determined Fed that want to tighten a lot further before signalling to the market any sense of a change in stance. The rebound in the equity markets will likely make the Fed more determined to hike aggressively.”
“The Jackson Hole gathering will likely be used to signal the Fed’s determination and with another jobs report and CPI report before the FOMC meeting in September, the market could soon start to price in more tightening over the course of the remainder of this year.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
