EUR/USD to decline towards the 1.15 level by year-end – MUFG

Economists at MUFG Bank have made some notable alterations for the forecast profile for EUR/USD. The pair is now expected to edge lower towards the 1.15 level by the end of 2021.

See – EUR/USD: Scope for a substantial drop to the 1.1020/00 zone – Credit Suisse

Upward revision to USD outlook heading into year-end

“We now expect EUR/USD to continue grinding lower towards the 1.1500-level by the end of this year after abandoning our previous call for the pair to rebound modestly back towards the 1.2000-level.”

“The US dollar is expected to continue to benefit from the Fed’s hawkish policy shift. The Fed is now planning a faster pace of policy normalization than we had previously expected.” 

“The Fed has sent a clear signal that it will announce QE tapering plans “soon” which most likely means at their next meeting on 3rd November. The main risks to that timeline are posed by a more disorderly outcome from the US debt ceiling stand off and/or evidence of a sharper slowdown for the US economy.” 

“We expect US politicians to ultimately extend the debt ceiling rather than trigger a recession by slashing government spending.”