The common currency has advanced as the prospects of a smooth Brexit advanced. How is it positioned amid the critical vote?
Here is their view, courtesy of eFXdata:
MUFG Research discusses EUR/USD outlook and adopts a tactical bullish bias, expecting the pair to trade upward in a 1.0950-1.1250 range in the near-term.
“The euro has continued to strengthen modestly against the US dollar rising to its highest level since late August and moving further above the 1st October low at 1.0879. The next key resistance level for EUR/USD is provided by the 200-day moving average which comes in at 1.1212.
The main fundamental driver for the stronger euro has been the paring back of the No Deal Brexit risk. A last-minute Brexit deal would help ease downside risks for the euro-zone economy and the euro. All eyes will now be on the expected UK parliamentary vote on Saturday to see if the deal has sufficient support to pass. Without DUP support, the outcome from the vote will be a close call. For the euro to extend it advance at the start of next week will require the deal to be passed in parliament. Otherwise, it will correct back towards the 1.1000-level,” MUFG notes.
“The ECB is also set to meet in the week ahead. It will be President Draghi’s last meeting but is unlikely to be a market mover. The ECB set out its plans for the monetary policy last month,” MUFG adds.
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