The following are EUR/USD range and and bias for next week as provided by Bank of Tokyo-Mitsubishi UFJ, Ltd (BTMU).
EUR/USD – bearish bias – (1.3400-1.3800).
The euro is likely to remain under modest downward pressure ahead of next week’s ECB monetary policy meeting. The EUR/USD rate has fallen back below its 200-day moving average for the first time since September of last year threatening the sustainability of the medium-term up trend which has been in place since the summer of 2012.
Recent euro weakness in advance of next week’s ECB policy meeting highlights that monetary easing expectations have likely already been discounted.
For euro weakness to accelerate after next week’s meeting, it would likely require the ECB to either adopt some form of asset purchases or indicate that they are becoming a more realistic policy option in the near-term. A modest downgrade to the ECB staff’s inflation forecasts is unlikely to trigger ECB asset purchases. A combination of lower rates and liquidity boosting measures is expected which has already weighed on the euro and may limit further downside potential in the near-term.
The US dollar may derive support from further evidence of a strengthening US labour market and that the US economy is rebounding strongly in Q2 after the sharp slowdown in Q1.