FXStreet reports that according to economists at MUFG Bank, diverging ECB and Fed QE policy discussions are set to weigh on EUR/USD in near-term.

“The improving growth outlook is unlikely to prove sufficient though to prompt the ECB to announce a slowdown in the pace of QE purchases. Recent dovish comments from ECB officials have pushed back against early QE taper expectations. The majority of economists now only expect the ECB to announce slower QE purchases in September. The ECB is also expected to release the conclusions from their monetary policy strategy review in September which is shaping up to be a bigger event risk”

“We expect the ECB to signal that ‘purchases will be maintained at around the current pace’. The market reaction should be limited as euro-zone yields have already adjusted lower in recent weeks. In the first hour following the last two ECB policy decisions the EUR has weakened marginally. We expect a similar reaction this time around.”