MUFG’s short-term EUR/USD valuation model (STVM) has shot considerably higher than spot opening a large divergence. Economists at the bank expect the EUR/USD pair to extend its race higher.

EUR/USD short-term valuation model points to higher spot

“If risk conditions remain favourable the most likely scenario in our view is that EUR/USD will follow the lead of the STVM and continue to grind higher.” 

“Only a re-emergence of tighter financial conditions would scupper this scenario now over the short-term. That of course is plausible now given the renewed surge in crude oil prices.”