EUR/USD: Brighter vaccination prospects in Europe to limit the downside – MUFG

Vaccination roll-out in key EU countries surges, improving the outlook for the EUR/USD pair, DerekHalpenny, Head of Research, Global Markets EMEA & International Securities at MUFG Bank, reports. 

See – EUR/USD: Strong US economic data to cause another leg lower – Rabobank

Tentative turn in infections in key EU countries

“Former French Finance Minister and EU vaccine coordinator, Thierry Breton confirmed an ‘extremely rapid increase’ in vaccine production in the EU that leaves the EU on track for vaccinating 70% of adults by July. That appears a long shot at this stage but levels between 50% and 60% remain feasible.”

“The infection rates in France, Italy and Germany are providing some relief that the current wave may be easing. The 7-day averages in Germany and France have eased off in April – infections have eased more notably in Italy.”

“The higher yields in the US and the evidence of better COVID-19 vaccination roll-outs in Europe may well limit EUR/USD downside if we do see the US dollar bid following higher inflation leading to higher yields. We’d still expect a EUR/USD decline but the euro should outperform other G10 currencies versus the dollar.”