The euro has been moving in a back and worth movement, unable to decide on a direction. What’s next? The team at MUFG examines its role:
Here is their view, courtesy of eFXdata:
MUFG Research discusses EUR outlook in light of assessing if the single currency qualifies as a safe-haven asset (rise amid risk-off conditions).
“Investor sentiment in the financial markets remains fragile as fears over an escalation in global trade tensions persist…
In FX, the obvious currencies that would out-perform are the traditional safehaven currencies – the yen and the Swiss franc. How the euro might perform is less clear but recent history does suggest safe-haven characteristics for the euro too,” MUFG notes.
“So while history suggests the euro safe-haven status would limit euro selling on an escalation in trade conflicts, there are reasons to be cautious on assuming this status would hold to the same degree as prior going forward.
We would still expect EUR to out-perform relative to pro-growth currencies given its safe-haven status but that performance is less assured given these added uncertainties,” MUFG adds.
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