MUFG Research maintains a short EUR/USD in its TotW portfolio targeting a move towards 1.0350.
"The US dollar has regained upward momentum after Fed Chair Powell gave the green light for the US rate market to continue pricing in more aggressive rate hike expectations for this year. His semi-annual testimony on monetary policy gave off the impression that the Fed has been rattled by the stronger activity and inflation data in recent months along with the upward revisions to the previous quarter. It suggests that inflationary pressures are running higher than expected at the time of last month’s FOMC meeting," MUFG notes.
"Overall, the developments have clearly increased upside risks for the US dollar. While we had not been expecting the Fed to deliver such a hawkish policy update yesterday, it does support our forecast for the US dollar to rebound further in the near-term," MUFG adds.