MUFG summary via eFX.
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- Current Tight Trading Range: MUFG notes that EUR/USD has been trading within a narrow range of 1.0500 to 1.1000, supported by their short-term valuation model that takes into account yield spreads, equity market performance, and energy prices.
- Downward Pressure on EUR/USD: MUFG expects EUR/USD to gravitate towards the lower end of the aforementioned range. They attribute this to various short-term fundamentals that include yield differentials and other economic variables.
- Temporary Lift from ECB Hike: MUFG acknowledges that an ECB rate hike next week could provide a brief respite for the euro, but they believe this effect would be temporary.
- Consistent View on USD: The bank's forecast aligns with their updated view that the USD is likely to remain strong for the rest of this year.
As an update for the opening of the week, the USD is a touch weaker across the board with USD/JPY shunted lower on Ueda's comments made Wednesday and reported over the weekend.
in chronological order:
- Bank of Japan Governor Ueda says his focus is on a 'quiet exit' reducing monetary easing
- USD/JPY indicating a big figure lower than Friday after 'exit' comments from BOJ Gov Ueda
- More on Bank of Japan Governor Ueda weekend comments sending USD/JPY 100 points lower