EUR/USD: Euro set to suffer further weakness even as European economy continues to outperform – MUFG


The EUR/USD pair bounced on Friday but is again grinding lower and is seeing a retest of the year to date low at 1.1704 from the end of March. Economists at MUFG are maintaining a bearish bias for EUR/USD in the month ahead.

The USD leg is continuing to derive support from Fed’s plans to begin QE tapering

“The US economy is continuing to recover strongly with employment growth picking up in recent months. It leaves the Fed on course to make a QE taper announcement before the end of this year.”

“Long-term US yields have put in place a near-term bottom which is helping to encourage a stronger USD as well. We do not expect upcoming uncertainty over the US debt ceiling to materially weaken the USD in the month ahead.” 

“The euro is not benefitting from the improving growth outlook as the ECB has strengthened their commitment to maintain loose monetary policy by adopting a higher hurdle for rate hikes in their new forward guidance. The widening policy divergence between the ECB and Fed will encourage a weaker euro.”

“The German election is scheduled on the 26th September with polls pointing to a closer race. It should garner more market attention early in September and the uncertainty could weigh modestly on the euro, although we view any euro weakness on the back of the German election as likely to prove temporary.”

 

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD trades around 0.6660 after another uneventful session

AUD/USD trades around 0.6660 after another uneventful session

The AUD/USD pair remained away from investors’ radar and holds on to familiar levels in the 0.6660 region. Australian calendar has nothing to offer on Wednesday, but the RBNZ monetary policy decision may spur action.

AUD/USD News

EUR/USD lacks directional strength, hovers around 1.0850

EUR/USD lacks directional strength, hovers around 1.0850

The EUR/USD pair extended its consolidative phase for the second consecutive day as financial markets missed a clear catalyst. Attention flips to the FOMC Meeting Minutes scheduled for mid-Wednesday.

EUR/USD News

Gold steadies around $2,420 ahead of FOMC Minutes

Gold steadies around $2,420 ahead of FOMC Minutes

Gold gained traction and climbed to $2,430 area in the American session, turning positive on the day. The pullback in the benchmark 10-year US Treasury bond yield helps XAU/USD stage a rebound following the sharp retreat seen from the all-time high set at the weekly opening at $2,450.

Gold News

Ethereum could see new all-time high following Fidelity and Grayscale updates on ETF application

Ethereum could see new all-time high following Fidelity and Grayscale updates on ETF application

Ethereum (ETH) continued its rally on Tuesday following filings on the Securities & Exchange Commission's (SEC) website showing Fidelity and Grayscale filed an amended S-1 registration and initial 19b-4, respectively, for their spot ETH ETF products.

Read more

RBNZ expected to keep key interest rate on hold as inflation pressures persist

RBNZ expected to keep key interest rate on hold as inflation pressures persist

The Reserve Bank of New Zealand is widely anticipated to maintain the OCR at 5.50%. The language in the policy statement is expected to remain hawkish. The New Zealand Dollar has room to extend its bullish momentum.

Read more

Forex MAJORS

Cryptocurrencies

Signatures