Forex Flash: EUR/USD looks bearish ahead - BTMU

FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts believe that EUR/USD looks bearish ahead and will trade between 1.2750 and 1.3150.

They feel that the Euro heads into next week under downward pressure, driven by investor uncertainty relating to developments in Cyprus. They add that the ECB has already announced that it will suspend the provision of emergency liquidity to Cypriot banks on Monday if Nicosia did not have a bailout plan agreed with the EU and IMF by that date. They write, “The hard-line stance from the ECB sets a clear deadline for Cyprus to agree to a plan. The failure to reach an agreement poses downside risks for the euro as the withdrawal of ECB support for the Cypriot banks would make them insolvent and open door to a disorderly EMU exit.” As such they believe that Cyprus will reach an agreement helping to stabilize the euro. However any scope for a euro rebound is only modest with evidence emerging that the euro-zone economy is still struggling to exit recession. The much weaker than expected euro-zone PMI surveys for March have served to increase the likelihood of further monetary easing from the ECB weighing upon the euro.