Analysts at MUFG Bank have now a bullish bias for the EURUSD pair. They see it trading in the range 0.9800-1.0800 over the next weeks. They point out that a consolidation above the 200-day SMA at 1.0435 would increase the risks of a rally toward 1.0800.
The EUR has staged a strong rebound against the USD in recent weeks resulting in EUR/USD moving further above the low from the end of September at 0.9536. The down trend that had been in place since the start of the Ukraine conflict from late February has just been broken providing a strong technical signal that the balance of risks has become less favourable for the USD in the near-term. The best-case scenario for the USD in the month ahead is that it begins to consolidate at lower levels against the EUR between 1.0000 and 1.0500.”
“There is a heightened risk that the USD sell-off could extend further if EURUSD breaks above resistance provided by the 200-dma at around 1.0435 that would open the door to a further leg higher towards the next resistance area between 1.0800-1.1100. The pair has not closed above the 200-dma since June 2021.”
“The main downside risk to our bullish EURUSD bias in the month ahead would be a sharper sell-off for risk assets triggered by intensified fears over a hard landing for the global economy. It would trigger a renewed safe haven bid into the USD pulling EURUSD back below parity and towards year to date lows. The most likely triggers would be a stronger US CPI report for November followed by a hawkish Fed policy update next month.”
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