UOB Research discusses its updated outlook and targets for EUR/USD and USD/JPY.
"EUR/USD: Going forth, EUR/USD may also draw further support from the bloc’s EUR750bn recovery fund which is on track to make its first disbursement this summer. However, the latest hawkish shift from the Fed is an important new catalyst that may have cemented the EUR/USD’s double-top at around 1.23. From here, we see a period of consolidation for EUR/USD at around 1.19 across 3Q21 and 4Q21, followed by a retreat to 1.17 in 1Q22 and 1.16 in 2Q22," UOB notes.
"USD/JPY: With 10-year Treasury yield edging higher towards 2% by end-2021 while 10-year Japanese Government Bond yield stay tethered at 0% due to BOJ’s yield curve control, a widening yield gap would spur outwardly investment and exert upward pressure on the USD/JPY. Hence, we update our USD/JPY forecasts to 112 in 3Q21, 113 in 4Q21 and 114 in both 1Q22 and 2Q22," UOB adds.