EUR/USD: Set to retest the pre-Omicron low of 1.1186 – MUFG

With plenty of central bank meetings next week, including the Fed and the European Central Bank, analysts at MUFG Bank, see the euro set for further declines going forward. They look look for a test of the recent low at 1.1186.

Key Quotes:

“We see EUR/USD remaining under downward pressure and continue to expect a slow grind to the 1.1000 level. In less than 24hrs next week we are likely to see quite different communications from the Fed and ECB with the ECB determined to reinforce its current guidance of no rate hike until inflation is at 2% “durably” and well ahead of the end of the forecast period. The message will act to depress rate hike expectations in the aftermath of the meeting.”

“EUR/USD is set to retest the pre-Omicron low of 1.1186 helped by an ECB policy announcement that will reinforce the more dovish stance of the ECB relative to the Fed and other G10 central banks.”