EUR/USD: It will be hard to sustain any rallies – MUFG

FXStreet Insights Team FXStreet

Thursday saw the biggest trading range in EUR/USD since the US CPI data on 13th February. Economists at MUFG Bank analyze the pair’s outlook.

Can USD weaken on the back of increased risk appetite?

While German manufacturing remains in the doldrums, there are certainly some bright spots emerging with the services sector rebounding more than expected which bodes well for some pick-up in GDP growth in Q1 relative to the flat growth from Q4. It does in our view bode well for a more EUR-supportive economic backdrop emerging going forward. That makes sense from the perspective that a reversal of a far more damaging energy price shock in Europe should have a more notable impact on the data as it reverses.

The 2-year UST yield is 50 bps higher this month, slightly more than the move in Germany and with the equity market rally triggered by AI-related tech it makes it more questionable whether the Dollar can weaken on the back of increased risk appetite.

The latest forecasts show 2.7% CPI in 2024; 2.1% in 2025 and 1.9% in 2026. A cut to the 2024 level with the 2025-2026 levels on average at 2.0%, it is difficult to see why the ECB should not cut at the April meeting. While that small risk exists (8 bps still priced) it will be hard for the EUR to sustain any rallies.

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.

Week ahead: US CPI might challenge the geopolitics-boosted Dollar

Geopolitics may try to steal the limelight from US data. A possible US Supreme Court ruling on tariffs could dictate market movements. Dollar strength might be tested if investors refocus on Fed expectations. A crammed data calendar next week, US CPI comes on Tuesday; Fedspeak to intensify. Euro weakness persists, lingering risk of deterioration in US-EU relations.

Week ahead – US CPI might challenge the geopolitics-boosted Dollar

Geopolitics may try to steal the limelight from US data. A possible US Supreme Court ruling on tariffs could dictate market movements. A crammed data calendar next week, US CPI comes on Tuesday; Fedspeak to intensify.

XRP trades under pressure amid weak retail demand

XRP presses down on the 50-day EMA support as risk-averse sentiment spreads despite a positive start to 2026. XRP faces declining retail demand, as reflected in futures Open Interest, which has fallen to $4.15 billion.