EUR/USD: All eyes on Trump’s initial policy focus - MUFG

In view of the analysts at MUFG, the EUR/USD rate should continue to be driven by the US dollar leg in the week ahead.

Key Quotes

“The US dollar has been correcting modestly lower early this year lifting the EUR/USD rate back towards resistance from its 55-day moving average at just above the 1.0600-level. It now appears broadly in line with short-term fundamental drivers according to our valuation model. The main focus in the week ahead will be President elect Trump’s inauguration and the initial implementation of policies in the week ahead.”

“The US dollar’s correction lower could extend further if more protectionist trade policies garner the most attention in the near-term. The market will also be wary for any further potential comments regarding the strength of the US dollar. In contrast, the US dollar could regain upward momentum if tax reform, infrastructure investment, and deregulation policies garner more attention.”