UBS: EUR/USD Risks Balanced Around 1.20 Level

EUR/USD Stabilizes Near 1.20 Level

UBS reports that the EUR/USD currency pair faces balanced risks around the key 1.20 level. The bank has shifted its outlook for both the Euro and the US Dollar to Neutral, anticipating a period of sideways trading.

Market Performance and Outlook

After reaching the 1.20 forecast, the EUR/USD has entered a range, with its valuation gap now largely closed. UBS analysts note their focus has shifted towards other currencies, including the AUD, NOK, and BRL, which they view as attractive.

Competing Factors for the Dollar

The outlook is influenced by competing forces. A strengthening US economy and less urgent need for Federal Reserve rate cuts could support the dollar. However, structural headwinds like the US twin deficit weigh on its longer-term prospects, creating a balanced risk profile.

Sideways Trading Expected

UBS expects the EUR/USD pair to trade sideways with balanced risks. Unexpected global economic shifts or geopolitical events could trigger larger currency movements and alter this stable outlook.

FAQ

Q: What is UBS's current stance on EUR/USD?

A: UBS has a Neutral stance on both the EUR and USD, expecting the pair to trade sideways around the 1.20 level.

Q: What are the main risks for the US Dollar?

A: Risks include underestimation of US economic strength versus long-term structural issues like the twin deficit.

Source: Investing.com