FXStreet (Barcelona) – The Bank of Tokyo-Mitsubishi UFJ, maintains a neutral outlook for EUR/USD for the week ahead, expecting the pair to maintain a 1.1050-1.1450 range, and further highlights the key reasons behind this consolidation view for the pair.
Key Quotes
“The euro is likely to remain within a consolidation phase against the US dollar in the near-term. The US dollar is deriving support from building evidence that the US economy is returning to more solid growth which is increasing the likelihood that the Fed will begin to raise rates this year. However, the developments have not yet provided a strong enough trigger for the resumption of the US dollar uptrend.”
“The upcoming FOMC meeting may also dampen scope for renewed US dollar strength in the near-term. The Fed is likely to downgrade their outlook for US economic growth this year displaying more caution over the strength of the expected economic rebound. The strength of the US dollar will likely be mentioned again as one of the headwinds to growth.”
“FOMC participants are also likely to lower their projections for the Fed funds rate expecting more gradual tightening. The risks will likely shift towards the first rate hike being delivered later this year. The interest market’s thinking is already more along those lines, and the US dollar already appears on the weaker side relative to yield differentials which may dampen the negative impact of the more dovish FOMC projections.”
“The close correlation of late between the euro and German Bund yields appears to showing some tentative signs of weakening. The latest developments regarding Greece’s attempts to secure short-term financing are expected to continue supporting euro volatility in the week ahead with Euro Area Finance Ministers meeting in Luxembourg.”
“EUR/USD – Neutral Bias – (1.1050-1.1450)”
(Market News Provided by FXstreet)