The EUR/USD is trading below 0.9830, on its way to the lowest weekly close in decades. Analysts at MUFG Bank hold a bearish perspective on the EUR/USD pair for October. They see the pair trading in a range between 0.9500 and 1.03000. 

Key Quotes:

“In the month ahead, we are maintaining a short EUR/USD bias. The Fed’s commitment to deliver further large rate hikes and the tightening of global financial conditions should continue to favour a stronger US dollar. The Fed has signalled clearly that it wants to see sustained evidence that inflation pressures are easing before delivering a dovish policy pivot. The stronger US CPI report for August has provided an even higher hurdle for a dovish pivot.”

“The main upside risk to our bearish EUR/USD bias could be triggered by a further paring back of more acute energy supply concerns in Europe. If the price of gas continues to fall heading into the winter it would help to ease fears over a sharper slowdown in the euro-zone. At the same time, the EUR could strengthen more than expected if the ECB keeps raising rates at a faster pace while the Fed signals that is considering slowing hikes.”