The US Dollar retreated after the dovish words from Fed Chair Jerome Powell, that does not see breakaway inflation nor an overheating economy. However, ranges may be limited.
Here is their view, courtesy of eFXdata:
MUFG Research discusses EUR/USD and USD/JPY outlook and shifts back to a tactical neutral bias, expecting EUR/USD to trade in 1.14-1.17 range, and USD/JPY in 109.50-112.50 in the near-term.
“Looking ahead, securities investing flows are unlikely to impact the direction of foreign exchange. Fed Chair Powell is unlikely to say anything about any rate hikes beyond September. For now, we expect Japanese export and dividend redemption flows to force USDJPY,” MUFG argues.
“The euro has quickly reversed the initial losses sustained against the US dollar following the recent intensification of concerns over potential negative spill-overs to the euro-zone from Turkey’s currency crisis. The price action supports our view that the initial euro pessimism was overdone. There are no major events in Europe in the week ahead. Rising Italian government bond yields ahead of the release of the populist government’s first budget continue to pose some downside risk for the euro,” MUFG adds.
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