MUFG Research discusses EUR/USD outlook and maintains a bearish bias in the near-term.
"For now though, the Fed looks less likely to announce any new meaningful policy strategy in September which could help remove some near-term downside risks for the dollar.
Our view of potential near-term USD correction stronger therefore remains intact with scope for EUR/USD to correct further lower in the coming days and week," MUFG notes.
"The EUR has benefitted from a relatively positive outlook for growth driven in part by COVID improving relative to the US. That is no longer the case and therefore has the potential to undermine the euro over the coming weeks.
Market participants will become increasingly sensitive to further evidence of Covid spread and until we see these trends in Europe turn lower again, the risk/reward for EUR is set to remain skewed to the downside," MUFG adds.