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EUR/USD has edged lower over the past week. Economists at Bank of Tokyo-Mitsubishi UFG (MUFG) analyze the outlook for EUR/USD ahead of the ECB and Fed policy updates.
Maintain a higher trading range
We still believe that EUR/USD has entered a new higher trading range between 1.1000 and 1.1500.
Taken together, we believe policy updates from the ECB and Fed in the coming week will pose downside risks to EUR/USD. Assuming the Fed doesn’t signal that next week’s rate hike will be the last of the cycle, and the ECB doesn’t strongly commit to another hike later this year. However, support at $1.1000 should hold and provide an opportunity to initiate long positions in anticipation of a move towards the top of the range in the coming months.
