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After a disappointing start to the year, the EUR has started to rebound in April. EUR/USD has climbed back above the 1.2000 level after putting in place a low of 1.1704 at the end of March and economists at MUFG expect the pair to near the 1.2350 in the month ahead.

EU vaccine roll-out has stepped up significantly

“We see scope for the EUR/USD pair to continue to head higher in the month ahead and back towards the highs from earlier this year at just below 1.2350.”

“With the negative US yield shock now fading, investors have returned to risk seeking mode helping to propel global equity markets to fresh record highs. Improving investor risk sentiment has been supported as well by building optimism over the outlook for the global recovery.”

“There has been a notable pick-up in the pace of vaccine roll-out especially in Germany and Spain where the total number of people who have received one dose has increased by more than 50% in the first half of April. It provides encouragement that the eurozone economy will be able to reopen as well during the second half of this year.”  

“Market participants are already beginning to anticipate that the ECB will slow down the pace of QE purchases in Q3 which alongside the improving growth outlook is helping to lift European yields and the euro. However, we do not expect the ECB to provide more clarity on QE purchase plans beyond Q2 at the current juncture.”