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Sep 17 - 02:55 PM

EUR: Upside & Downside Risks For The EUR Into The Coming Month - MUFG

By eFXdata  —  Sep 17 - 01:30 PM

MUFG Research adopts a neutral bias on the EUR in the medium-term and highlights the upside and downside risk for this view.

"Upside risks for the euro include i) further evidence showing that the global economy and European economies continue to recover faster than expected from the COVID shock, and ii) the Fed quickly backs up its new dovish policy goals by announcing new easing measures helping to keep downward pressure on US real yields and the US dollar more broadly," MUFG notes.

"Downside risk for the euro include: i) a further acceleration in COVID case growth in Europe followed by a pick-up in deaths and hospitalizations which prompts national governments to re-impose lockdown measures, ii) the ECB pushes back more aggressively against the stronger euro and below target inflation by clearly opening the door to further easing later this year, and iii) Brexit trade talks breakdown acrimoniously after neither side is willing to compromise resulting in another sharp reappraisal of No Deal Brexit risks," MUFG adds.

Source:
MUFG Research/Market Commentary

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