EUR/USD: A break recent highs in US yields could renewed dollar strength - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, have a neutral bias for the next week on the EUR/USD pair and they see it trading in the 1.0450  - 1.0850 range. 

Key Quotes: 

“We are sticking with our neutral bias for the week ahead although there are tentative signs that the recent correction lower for the US dollar may soon start to reverse.”

“The US dollar has remained offered recently even as US yields and equities have been moving higher which is unlikely to prove sustainable. If US yields break above their recent highs from the middle of December it could trigger renewed US dollar strength in the week ahead. US fundamentals remain supportive for a stronger US dollar. Economic data releases in the week ahead should confirm that the US economy is both expanding more solidly and inflation pressures are building. The developments are increasing pressure on the Fed to deliver a more hawkish policy outlook.”

“The euro is also deriving support from improving economic fundamentals in the euro-zone with both growth and inflation picking up. However, the scope for further euro upside is more limited given that the ECB remains strongly committed to maintaining loose monetary policy in the near-term.”