MUFG Research discusses the EUR outlook and maintains a bearish bias over the coming months.
“At the start of this month market participants have become even more
fearful over downside risks to growth for European economies posed by
energy supply restrictions. It follows the decision by Russia to turn
off gas supplies to Bulgaria and Poland. While we do not expect Russia
to turn off gas supplies to other major euro-zone economies such as
Germany and Italy, the uncertainty will linger in the near-term
until there is more clarity over how the stand-off over Russia’s demand
to be paid in roubles is likely to be resolved,” MUFG notes.
“A more disruptive than expected outcome for European gas
supplies would increase the likelihood of EUR/USD falling closer to and
below parity in the coming months,” MUFG adds.
The euro is down 105 pips to 1.0515 today.For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.