MUFG Research discusses EUR/USD outlook and adopts a tactical neutral, expecting the pair to trade in 1.1150-1.1400 range in the near-term.
"The main focus in the week ahead will be the upcoming FOMC meeting. The US rate market is already pricing in a high probability of a 0.25 point cut in July. It creates a high hurdle for a dovish surprise. Market participants will at least be looking for more encouragement from the Fed that they are moving closer to cutting rates. If there is any disappointment it could trigger a temporary relief rally for the US dollar. In contrast if there is a clear signal that rate cuts are coming soon, US dollar weakness is likely to extend further in the near-term," MUFG notes.
"However, the market’s focus will then quickly shift to the upcoming G20 summit at the end of the month which could prove more pivotal for Fed rate expectations. We favour a neutral bias for US dollar direction in the week ahead given the current heightened state of policy uncertainty," MUFG adds.