EUR/USD: Dollar regains upward momentum - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, have a bearish outlook for the EUR/USD pair in the short-term and expect it to trade in the 1.0825 - 1.1200 range. 

Key Quotes: 

“The US dollar has regained upward momentum over the past week benefiting from the reduced likelihood that Donald Trump will become the next President. We believe that the market is now discounting little to no risk of Donald Trump becoming President. The appointment of Hillary Clinton as President would be welcomed initially by the market for providing more certainty over the outlook for US policies in particular for reducing the likelihood of trade disputes and higher government debt.”

“It should make the Fed more comfortable to resume rate hikes in December which is offering support for the US dollar in the near-term. The release of the latest US CPI and retail sales reports for September and a speech from Fed Chair Yellen will be in focus in the week ahead (all tomorrow), and are unlikely to materially change the perception that the Fed will raise rates in December.”

“The US dollar is also deriving support from negative developments overseas. We believe that the increased likelihood of a “harder Brexit” is beginning to weigh more on the euro. It poses increased downside risks for the outlook for growth in the euro-zone and could potentially prompt the ECB to maintain loose policy for longer. We expect President Draghi to downplay speculation that the ECB is considering tapering QE at their upcoming meeting.”