EUR/USD has wobbled on the ECB decision but failed to choose a clear direction. The focus is now on the Fed.
Here is their view, courtesy of eFXdata:
MUFG Research discusses EUR/USD tactical outlook and maintains a bearish bias towards 1.1050 in the near-term.
“The euro tested the bottom of its recent trading range against the US dollar between 1.1100 and 1.1400. The strong signal from the ECB that they are planning a package of easing measures as soon as at their next policy meeting in September should help to keep the euro under downward pressure in the coming months. Market participants will be encouraged to bring forward expectations for the resumption of QE purchases,” MUFG notes.
“The euro subject to some upside risk in the week ahead if the Fed then delivers a larger than expected 50 basis point rate cut. However, we believe the risk of a larger Fed rate cut has diminished recently. The recent agreement to extend the US debt ceiling, the resumption of US-China trade talks, and firmer US data flow have eased downside risks for the US dollar. In these circumstances, we are sticking to our bearish bias for EUR/USD,” MUFG adds.
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