What's the trade in the week ahead
Analysts at MUFG recommend selling EUR/USD with a target of 1.16 in the week ahead and a stop at 1.1950. Spot is at 1.1769 after a 100 pip decline today (the report was first issued earlier).
"We are recommending a short EUR/USD trade idea," the report says. "It is a short-term tactical trade to reflect the increasing risk of a correction lower for the pain in the near-term. EUR/USD has surged higher by almost 7% since June. It has resulted in the USD becoming heavily oversold thereby increasing the risk of a correction lower," they write.
"We are wary though of the risks that the USD could remain under selling pressure ahead of Jackson Hole later this month so have set a tight stop. For those still concerned by further USD selling, a short EUR/JPY position could offer more attractive risk-reward," MUFG writes.
