There is a clear debate still ongoing over whether the European Central Bank (ECB) rate hike should match the September move of 75 bps or be reduced to 50 bps. In the latter case, the euro could come under further downward pressure, economists at MUFG Bank report.

Higher risks of conditions worsening in Europe

“If financial market conditions continue to worsen, there is every chance the ECB could revert back to a 50 bps hike.” 

“We certainly see far higher risks of conditions worsening and hence EUR/USD downside momentum will likely return quickly.”