The Euro has rebounded against the US Dollar in recent days after hitting a year-to-date low at the start of this week at 1.0723. Economists at MUFG Bank analyze EUR/USD outlook.
The recent run of stronger US economic data and pushback by Fed officials against a rate cut as soon as in March has prompted the US rate market to delay the expected timing of the Fed’s first cut until the 1st May FOMC meeting. In contrast, the Eurozone rate market has moved to price in a higher probability of the ECB delivering an earlier rate cut in April rather than June although the timing is still finely balanced.
We continue to judge that risks are tilted modestly to the downside for EUR/USD in the near term.