EUR/USD: Euro is coming back under downward pressure - BTMU

According to analysts from The Bank of Tokyo-Mitsubishi UFJ, the EUR/USD pair is biased to the downside. They see the pair trading between 1.0500 and 1.0850 next week. 

Key Quotes: 

“The euro’s upward trend against the US dollar at the start of this year has started to reverse. Rising political uncertainty in Europe is beginning to weigh more on the euro in the near-term. The euro is likely to remain under selling pressure in the week ahead in the run up the upcoming EU finance ministers meeting on the 20th February.”

“In contrast, the euro-zone economy is displaying strengthening cyclical momentum which should be evident in the week ahead when the Q4 GP report is released. The US dollar has rebounded broadly over the past week which appears to largely reflect that it had become oversold. However, we expect it to struggle to extend upside in
the near-term.”

“The US interest rate market is more comfortable that the Fed will only raise rates gradually in the coming years. The semi-annual testimony from Fed Chair Yellen will be scrutinized closely to assess if she has been comforted by the appearance of more slack in the US labour market. The latest US retail sales and CPI reports for January will shed further light on whether the US economy is expanding more solidly and inflation pressures are picking up.”