MUFG Research sees a scope for the EUR to outperform on a potential lifting in incoming flows.
"The turn to less favourable risk appetite yesterday that provided the US dollar with some renewed strength across G10 was less evident versus the euro and the more positive fundamental backdrop is likely to continue providing support for EUR/USD, although we would not be surprised to see the euro start to consolidate rather than extend noticeably further given the scale of recovery from the low at the end of March," MUFG notes.
"No doubt the pessimism of just a few weeks ago fuelled by the poor vaccination roll-out has shifted as the EU authorities turn the situation around and ramp up vaccinations. Furthermore, a greater degree of resilience to lockdowns, evident in some of the macro data is also reflected in the corporate earnings upgrades. This could well result in a more favourable turn in capital flows," MUFG adds.