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EUR/USD in a narrow range but next week’s FOMC could be a game-changer – MUFG

MUFG on the euro

MUFG Research discusses EUR/USD outlook and adopts a neutral bias but flags next week’s FOMC as a possible trigger for reversing USD strength through next year.

“The euro is continuing to stabilize at lower levels against the US
dollar. A narrow trading range between the 1.1200 and 1.1500-levels
remains in place for now. The ECB’s latest policy meeting proved largely
uneventful for the euro. The ECB was more cautious on the growth
outlook but it was largely as expected as market participants have
already pushed back the timing of the first expected ECB rate hike into
2020,” MUFG notes. 

“The main focus in the week ahead for the US dollar will be the upcoming FOMC meeting. If
the Fed pare back plans for further rate hikes in 2019 and open the
door to rate pause as early as in March, it could encourage a weaker US
dollar
,” MUFG adds. 

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