EUR/USD: Euro should remain under downward pressure over time – MUFG

Lee Hardman, currency analyst at MUFG Bank, explains they have a neutral bias for next week for the EUR/USD pair. They project it will trade in the 1.0900-1.1200 range. 

Key Quotes:

“The euro has been largely unmoved by the recent ECB and Fed policy meetings, although over time it should remain under downward pressure against the US dollar. The Fed is not following the script for more aggressive easing, and has signalled that the current rate cut cycle could be close to an end.”

“It will make it even harder to see a reversal of US dollar strength while the ECB has just announced a comprehensive package of easing measures. Loose monetary policy will remain in place for longer than expected in the euro-zone. However, the recent easing of Brexit risks and building optimism over a mini US-China trade deal are helping to ease downside risks for the euro in the near-term. The recent spike in USD funding rates is also creating additional uncertainty as well. It is encouraging speculation that the Fed will resume balance sheet expansion which could be putting a dampener on upside potential for the US dollar.”