MUFG Research discusses EUR/USD outlook and adopts a tactical neutral bias, expecting the pair to trade in a 1.1225-1.1525 range in the near-term.
"The euro is continuing to stabilize at lower levels against the US dollar. It has traded within a narrow range between 1.1200 and 1.1500 during November. Recently both the euro and US dollar have underperformed," MUFG notes.
"The next key event for the US dollar in the week ahead will be G20 Summit which is viewed as pivotal for setting expectations for Trump trade policy going forward. US dollar weakness would likely extend further if President Trump signals some tentative form of trade ceasefire with China. In contrast, if there is no breakthrough in talks with President Xi, market participants will assume that trade tensions will continue to escalate further.
The US threat of imposing tariffs on imports of autos is back on the table again. In the adverse scenario, the US dollar could begin reversing recent losses especially against the euro given the softening European economy would be particularly sensitive to auto tariffs," MUFG adds.