MUFG Research discusses EUR/USD outlook and maintains a tactical neutral bias, expecting the pair to trade in 1.0900-1.1200 range in the near-term.
"The euro has been largely unmoved by the recent ECB and Fed policy meetings, although over time it should remain under downward pressure against the US dollar. The Fed is not following the script for more aggressive easing, and has signalled that the current rate cut cycle could be close to an end. It will make it even harder to see a reversal of US dollar strength while the ECB has just announced a comprehensive package of easing measures.
Loose monetary policy will remain in place for longer than expected in the euro-zone. However, the recent easing of Brexit risks and building optimism over a mini US-China trade deal are helping to ease downside risks for the euro in the near-term," MUFG notes.
"The recent spike in USD funding rates is also creating additional uncertainty as well. It is encouraging speculation that the Fed will resume balance sheet expansion which could be putting a dampener on upside potential for the US dollar," MUFG adds.