EUR/USD: Vulnerable to breaking under 1.05 if issues over Credit score Suisse aren’t resolved shortly – MUFG

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For a lot of the previous month, the EUR had been grinding decrease towards the USD ensuing within the pair transferring towards the underside of the year-to-date vary between 1.0500 and 1.1000. A transfer beneath 1.0500 may very well be witnessed on renewed fears over Credit score Suisse collapsing, economists at MUFG Financial institution report.

Worth motion in EUR/USD to show extra unstable within the month forward

“The pair is susceptible to breaking under 1.0500 within the near-term if issues over the well being of Credit score Suisse aren’t resolved shortly.”

“We had been assuming that the ECB would observe by way of on their steerage from their final coverage assembly to ship one other bigger 50 bps hike however that’s not a achieved deal. The heightened issues over the well being of the banking sector may make the ECB extra cautious over persevering with to ship massive hikes. The elemental case for additional hikes remains to be in place although with core inflation stunning to the upside at the beginning of this yr, the Eurozone financial system avoiding recession, and the ECB lagging behind within the present tightening cycle leaving extra room for charges to rise additional.” 

“We count on worth motion in EUR/USD to show extra unstable within the month forward.”