EUR/USD: Scope for a more sustained break below 1.05 – MUFG

EUR/USD remains roughly unchanged in the aftermath of the ECB policy announcement. Economists at MUFG Bank analyze the pair’s outlook.

EUR/USD moves will be driven by the emergence of weaker US economic data

A renewed energy spike due to the Israel-Hamas conflict broadening out to include Iran is a risk for Europe and for EUR more specifically. We currently assume that does not happen.

The primary determinant of EUR/USD moves we think will come from the US Dollar side and will be driven by the emergence of weaker US economic data. 

EUR/USD remains resilient but we still see scope for a more sustained break below 1.0500 but maintain that levels below parity are unlikely.