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- EUR/USD: Forecast lowered after FOMC announcements but still higher – MUFG
EUR/USD: Forecast lowered after FOMC announcements but still higher – MUFG
FXStreet reports that economists at MUFG Bank have lowered their forecast for the EUR/USD pair from 1.26 to 1.22.
“The incoming economic data across the eurozone makes for a compelling case for the ECB to consider altering the pace of PEPP purchases come the September meeting. Given the PEPP program is scheduled to end fully in Q1 2022, some tapering down of the rate would be desirable to avoid a bigger cliff-edge decline next year. The economic backdrop will justify it too. Real GDP is set to be supported in H2 2021 by the release of funds under the EU Recovery Fund.”
“The FOMC announcements have led us to lower our year-end EUR/USD target from 1.2600 to 1.2200 but the prospect of ECB tapering and the benefits from the EU Recovery Fund should help provide a modest lift to EUR in H2 2021.”
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