EUR/USD has surged above parity.However, the pair is unlikely to extend its race higher, in the opinion of economists at MUFG Bank.
Energy crisis will continue to cap the euro
“We still believe the energy crisis in Europe will continue to limit how far the euro can strengthen on the back of a hawkish ECB, and eventually limit how far the ECB will be to hike rates beyond this year.”“We remain sceptical over EUR/USD’s ability to extend its advance much further above parity.”
EUR/USD retreats below 1.0050 as DXY starts to erase its losses
EUR/USD has lost its bullish momentum and declined below 1.0050 in the early American session. As focus shifts to Fedspeak ahead of the blackout period, the US Dollar Index rebounds from 10-day lows, not allowing the pair to gather bullish momentum.
GBP/USD clings to daily gains above 1.1550
Although GBP/USD erased a portion of its daily gains in the early American session, it holds comfortably in positive territory above 1.1550. The Bank of England announced on Friday that it postponed next week’s rate decision to September 22, causing investors to turn cautious.
Gold drops below $1,720 despite falling US yields
Gold reversed its direction and dropped below $1,720 after having touched its highest level in over a week near $1,730. Nevertheless, with the benchmark 10-year US Treasury bond yield losing nearly 2% on the day, XAU/USD manages to hold in positive territory.