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- EUR/USD: At risk of breaking below 1.05 if concerns over Credit Suisse are not resolved quickly – MUFG
EUR/USD: At risk of breaking below 1.05 if concerns over Credit Suisse are not resolved quickly – MUFG
For most of the past month, the EUR had been grinding lower against the USD resulting in the pair moving toward the bottom of the year-to-date range between 1.0500 and 1.1000. A move under 1.0500 could be witnessed on renewed fears over Credit Suisse collapsing, economists at MUFG Bank report.
Price action in EUR/USD to prove more volatile in the month ahead
“The pair is at risk of breaking below 1.0500 in the near-term if concerns over the health of Credit Suisse are not resolved quickly.”
“We had been assuming that the ECB would follow through on their guidance from their last policy meeting to deliver another larger 50 bps hike but that is no longer a done deal. The heightened concerns over the health of the banking sector could make the ECB more cautious over continuing to deliver large hikes. The fundamental case for further hikes is still in place though with core inflation surprising to the upside at the start of this year, the Eurozone economy avoiding recession, and the ECB lagging behind in the current tightening cycle leaving more room for rates to rise further.”
“We expect price action in EUR/USD to prove more volatile in the month ahead.”
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