MUFG Research discusses EUR/USD outlook and flags a scope for further upside in the near-term.
"The euro was relatively unmoved on the negative headlines yesterday. This suggests that while the tone regarding trade talks remains within a relatively limited range (without a major upset), there could be more upside potential for the euro than downside in the near term...This morning the euro had come down towards month-lows around the 1.1060 level as positive US data reinforced the prospect of an ongoing Fed pause. But downside for the euro could be limited from here," MUFG notes.
"From a technical perspective, the euro is nearing levels on the RSI where it would be poised for a recovery. And with the yield on 10-year German bonds climbing nearly 40bps since early September, the yield environment has also become more positive for the euro. Our yield differential model shows there is still some upside potential for the euro on this, with scope to reach the 1.1200 level against the dollar," MUFG adds.