MUFG Bank analysts maintain an idea of short operation in the EUR/USD and they see that it moves below parity. They believe that the euro will be affected by continued fears about the disruption of the euro zone economy and the risks of fragmentation.
Key Statements:
“We expect the euro to remain under short-term downward pressure fueled by continued fears about the eurozone economy being disrupted by energy supply constraints and fragmentation risks.”
“The release of the Eurozone PMI surveys for July has further reinforced fears of a deeper slowdown/recession in the Eurozone economy in the second half of this year. We also expect Italian bond yields continue to experience upward pressure ahead of the snap election to be held on September 25.”
“We don’t expect the ECB to step in to support the Italian bond market in response to heightened political uncertainty, unless yields soar. We expect these negative factors to outweigh the anticipated ECB tightening.”
Source: Fx Street
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