The EUR/USD pair has just climbed back above the 1.2200-level for the first time since the end of February as it continues to reverse losses from earlier this year. In light of the improving outlook for European economies, economists at MUFG Bank are maintaining a bullish outlook for EUR/USD for the month ahead.
See: EUR/USD to hit the 1.25 mark by September – Deutsche Bank
EUR rebounds as eurozone recovery pessimism eases
“The next key resistance levels are the high from 25th February at 1.2243 and then the year-to-date high at 1.2349 from 6th January.”
“The EU is now providing more vaccines per capita than the US and is on course to meet its vaccination target of 70% of adults by mid-July at current rates. With hospitalisations and deaths down sharply, governments are confident enough to plot the path out of lockdown. The positive COVID-19 developments provide more confidence that that activity in the euro-zone will begin to rebound more robustly from the middle of this year.”
“Financial conditions in the euro-zone remain highly accommodative despite the recent move higher in yields and the euro. It should provide encouragement for the ECB to consider scaling back the pace of planned QE purchases in Q3. The ECB policy meeting on 10th June will be important in setting out QE plans beyond Q2. A decision by the ECB to step back from the “significantly higher pace” of QE purchases in Q2 would help to lift the euro.”