EL7.AI
Forex•6 July 2026•
2 min read

MUFG Forecasts EUR/USD Recovery to 1.1800 as Business Confidence Rebounds

Key Facts

1MUFG expects EUR/USD to rebound toward the top of its 1.1400-1.1800 range as euro area growth proves more resilient than feared.
2The composite business confidence reading rose back to 50.0 in June, suggesting the worst of the energy shock may be passing.
3A final 25 basis point ECB rate hike in September remains expected, supported by signals from officials like Philip Lane.

Amid signs of stabilizing European economic momentum, MUFG analysts project a recovery for the EUR/USD pair toward the 1.1800 level, citing resilience in Eurozone growth that has surpassed initial fears. The composite business confidence reading climbed to 50.0 in June, a pivotal level suggesting the region has moved past the worst of the energy-driven shocks. According to reports, a final 25 basis point interest rate hike by the ECB remains the baseline expectation for September, a move reinforced by recent hawkish signals from officials including Philip Lane.

This bullish outlook is bolstered by improving macro data across major Eurozone economies, with Q2 GDP forecasts recently upgraded to 0.25%. In comparison to regional peers, recent data from France showed annual inflation cooling to 1.8% in June 2026 from 2.4% previously (per market data), while Germany reported a surprise 1.1% monthly jump in retail sales. These figures support MUFG's thesis that cyclical momentum is shifting in favor of the Euro, especially as US manufacturing indicators like the Chicago PMI showed signs of cooling to 56.7 points.

Key catalysts to watch in the coming days include the release of Italian inflation data and the US JOLTs job openings report, which recently stood at 7.594 million. These data points will be critical in determining if the Euro can sustain its recovery against the Greenback as the ECB and Fed monetary paths continue to diverge.