FXStreet reports that according to economists at MUFG Bank, the shared currency is set to take advantage of the recent outperformance of cyclical stocks.

“The Euro Stoxx 600 cyclical index relative to the overall Euro Stoxx Index has begun to outperform after a period of underperformance. Cyclicals outperformed from May last year through to 25th February but then went into a period of under-performance through to the end of March. Cyclicals have again started to outperform and is taking EUR/USD higher now. This cyclical performance relative to the overall market performance correlates tightly with EUR/USD and if this can be sustained it would suggest further EUR/USD gains are possible.”

“The outlook on vaccinations is improving and the pessimism that existed in March has diminished. The outlook now relative to elsewhere looks a little less concerning, prompting liquidation of EUR short positions. That could have further to run over the short-term.”