EUR/USD: Risks remain titled to the downside – MUFG

The EUR/USD pair is about to end the week at the same level it had a week ago. The main trend is bearish. Analysts at MUFG Bank remain bearish on the euro despite the policy support and even as the European Central Bank hikes interest rates further. 

Key Quotes:

“EUR a clear beneficiary of successful energy storage action ahead of winter.”

“Further fiscal support lowers the negative macro impact risks but risks still remain high.”

“ECB concerns over inflation intensifying.”

“We remain bearish EUR despite the policy support and further ECB hikes. Those hikes are fully priced and along with Fed action only reinforce the risks related to tighter financial conditions. Recent EUR performance suggests declines could prove more modest than say the declines versus USD for the higher beta G10 currencies.”