MUFG Research highlights 2 key scenarios for EUR/USD into year-end.

"We see two main scenarios for EUR/USD over the remainder of the year. In our base case, where the Fed does not follow through with rate hikes, we expect EUR/USD to move back up into the 1.1400–1.1800 range that has prevailed over the past year," MUFG notes.

"Alternatively, if the Fed delivers multiple rate hikes, EUR/USD could fall further below 1.1000. Evidence of slowing US inflation and/or a less hawkish Fed reaction function would support a weaker USD, and vice versa in the months ahead..

Looking ahead, next week’s ECB annual policy forum in Sintra should provide further insight into the extent to which monetary policy paths in Europe and the US are likely to diverge," MUFG adds.