The Euro-Dollar is struggling to clear 1.1630, with MUFG warning the EUR/USD looks overvalued as European gas and growth risks build.

The Euro to Dollar (EUR/USD) exchange rate has climbed back towards 1.1600, but the move is starting to look less convincing once valuation and Europe’s energy exposure are brought into the picture.

EUR/USD traded around 1.1597 early on Wednesday after reaching 1.1614 earlier in the week.

Softer expectations for Federal Reserve tightening should, on paper, have given the Euro more room to run. It hasn’t quite happened.

MUFG sees the hesitation as significant.

“The 200-day moving average is offering resistance at 1.1630,” the bank said, noting that the best level reached on Monday was 1.1614. “We do certainly sense a high level of caution in buying EUR/USD.”

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EUR/USD has recovered from below 1.1570, but the latest advance still leaves the pair short of the 1.1630 area highlighted by MUFG.

The more striking warning comes from MUFG’s valuation model.

“Our short-term regression model for EUR/USD already indicates current spot is about 2.5%-3.0% overvalued,” the bank said.

That is the awkward part. The Dollar has lost some rate support, yet MUFG argues the Euro is already trading richer than underlying short-term fundamentals justify.

Energy is central to the concern.

European gas storage is running just below the range seen in comparable years since 2011, while delayed winter purchases risk becoming more expensive as Asian LNG demand competes for supply.

MUFG also points to unusually low river levels across the Rhine, Danube, Loire and Po. That is not merely a transport problem. Lower waterways can disrupt industry, food production and power generation at the same time.

“If the refilling period continues to disappoint ahead of winter, a more severe terms of trade hit is likely,” MUFG warned.

Near and Medium-Term EUR/USD Outlook: ING Still Sees 1.18

ING is cautious about the immediate upside too, although its medium-term conclusion is notably more bullish.

“Yesterday’s EUR/USD rally stalled shortly above 1.16, and investors will be reluctant to push it much higher given energy price developments,” ING’s Chris Turner said.

ING also thinks the Dollar is “not quite ready to make a sustained break lower just yet”, with higher energy prices and long-dated US Treasury yields offering support. It expects DXY to remain broadly inside 99.40-100.00 in the near term.

Still, the bank keeps EUR/USD at 1.17 for end-September and 1.18 for year-end, based on its view that the Fed does not raise rates.

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The wider bank consensus also leans higher, with the median path reaching around 1.18 by Q2 2027, although the full forecast range stretches from roughly 1.10 to 1.21.

So there are really two EUR/USD stories here.

ING still sees a route higher once Fed tightening risk fades.

MUFG is warning that the Euro may already have run ahead of the near-term fundamentals, especially if Europe’s energy bill starts climbing again.

For the immediate trade, 1.1630 looks like the line that matters.

The GBPJPY pair ended the last bullish rally by providing a new close below the barrier at 216.35, affected by stochastic exit from the overbought level and forming some corrective waves, to settle near 215.65.

Note that the neediness of the positive momentum might force it to provide more corrective attempts, forcing it to suffer some losses by reaching 214.85 reaching 214.15 level, while breaching the barrier and holding above it will open the way for recording extra gains that might extend in the initial period at 216.85 and 217.55.

The expected trading range for today is between 215.10 and 216.35

Trend forecast: Bearish

The EURJPY pair kept its fluctuation since yesterday below the barrier at 184.90, forcing it to form some corrective trading by holding near 184.55, note that the bullish scenario will remain valid, depending on the stability above 183.15 level, however, the contradiction of the main indicators might force the price to form more corrective trading, which might target 184.15 and 183.75 level.

The price success in gaining bullish momentum and surpassing 184.90 level will reinforce the chances of resuming the bullish trend, reminding you that the extra targets are located near 185.45 and 185.95 level.

The expected trading range for today is between 184.25 and 185.00

Trend forecast: Fluctuating

– Written by


James Fuller

STORY LINK British Pound Forecast: GBP/USD Presured by Weak UK Jobs Data, US-Iran Tensions

The Pound US Dollar (GBP/USD) exchange rate moved modestly lower on Tuesday as renewed uncertainty in the Middle East encouraged investors to seek the safety of the US Dollar.

At the time of writing, GBP/USD was trading at around $1.3527, slightly below Tuesday’s opening levels.

The US Dollar (USD) strengthened on Tuesday, building on the recovery it began late on Monday as worsening geopolitical sentiment prompted investors to favour traditional safe-haven assets.

The latest source of concern was the expiry of the 60-day US-Iran Memorandum of Understanding without either a permanent peace agreement or an extension being secured, while the Strait of Hormuz remained closed.

With uncertainty surrounding the future of energy shipments through the region mounting, Brent crude prices climbed back above $90 a barrel during Tuesday’s session.

Tensions were further heightened after US President Donald Trump threatened military action against Oman should it obstruct negotiations with Iran, with the Gulf nation involved in separate efforts to facilitate the reopening of the strategically important waterway.

The Pound (GBP) came under additional pressure on Tuesday after the latest UK employment figures pointed to a loss of momentum across the labour market.

Office for National Statistics (ONS) data showed the unemployment rate remained unchanged at 4.9% in the three months to June, falling short of expectations for a decline to 4.8%. Employment growth also slowed sharply towards the end of the second quarter.

The accompanying figures revealed that real wage growth had eased as well, adding to the pressure on Sterling as investors scaled back expectations that the Bank of England (BoE) will raise interest rates later this year.

Near-Term GBP/USD Forecast: UK Inflation and Fed Minutes in Focus

Looking ahead, the publication of the UK’s latest consumer price index on Wednesday will provide the next major catalyst for the Pound to US Dollar (GBP/USD) exchange rate.

Later in the session, USD investors will turn their attention to the minutes from the Federal Reserve’s July policy meeting.

Although new Fed Chair Kevin Warsh has moved away from offering detailed forward guidance, markets are likely to scrutinise the minutes for indications of how policymakers view the outlook for interest rates over the coming months.

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USD/JPY tests key resistance at 159.50 – 160.00 as traders focus on the fundamental weakeness of the Japanese currency. However, traders remain cautious as BoJ may intervene to provide additional support to the yen.

If USD/JPY climbs above the 160.00 level, it will head towards the next resistance level at 161.50 – 162.00. A move above 162.00 will open the way to the test of the 164.00 level.

If you’d like to know more about how to trade forex, please visit our educational area.

The euro-dollar has held its post-Fed gains, but Bank of America sees limited scope for a stronger near-term rally.

The Euro to Dollar exchange rate (EUR/US) tradd around 1.1579 on Monday, close to its August high of 1.1585 and around 0.2% higher for the month.

EUR/USD has recovered from June’s low near 1.1325 but remains well below January’s 1.2075 peak.

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Bank of America FX strategists say its “near-term bullish USD conviction has reduced”, although the conditions are not yet in place for a decisive bearish Dollar stance.

US data have surprised on the downside and September Fed tightening expectations have fallen sharply, but EUR/USD has still “struggled to rally further”.

The bank argues that Middle East uncertainty is part of the explanation, with elevated European gas prices “capping EUR appreciation”.

Positioning has also changed.

BofA says reduced Euro shorts mean there is now less fuel for a squeeze higher, while markets may find it difficult to price out Fed hikes completely with another round of labour-market and inflation data due before September.

Fed Chair Kevin Warsh’s Jackson Hole speech is therefore an important near-term test, with BofA expecting markets to focus closely on any clarification of the Fed’s communication strategy.

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The Exchange Rates UK Research Sentiment Survey for August 2026 remains mildly constructive beyond the near term.

BofA sees EUR/USD around 1.15 in three months, 1.17 in six months and 1.20 in twelve months.

That would leave the pair close to current levels initially, before a more meaningful Euro recovery develops further into 2027.

Our currency coverage draws on live market data, official economic releases and published bank research.