EUR/USD: Hard to See a Range Breakout Next Week - MUFG
According to analysts from The Bank of Tokyo-Mitsubishi UFJ, next week
FOMC minutes poses some upside risk for the US dollar but the EUR/USD 1.12 - 1.16 range is likely to prevail.
Key Quotes:
“The euro continues to remain stable against the US dollar having traded
within a narrow range between 1.1200 and 1.1600 over the last couple of
months. It is hard to see the current range breaking in the week
ahead.”
“Downside risks for the US dollar have eased after weakness overshot in
the near-term. Recent economic data appears consistent with a pick-up in
US growth in Q2 but is not strong enough yet to encourage expectations
that the Fed will resume rate hikes as soon as in June.”
“Softer employment growth in April is helping to dampen Fed rate hike
expectations. The release of the latest FOMC minutes should be less
dovish signalling reduced concern over downside risks from global and
financial developments compared to in March. With the market already
pricing almost no probability of a rate hike in June, the risks are
skewed to the upside for the US dollar from the minutes.”
“The latest CPI report for April will also be watched closely to assess
if underlying inflation trends are firming. Risk sentiment is likely to
be the main driver for the euro in the week ahead, with it likely to
derive support in more risk-averse trading conditions.”
