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

Key Facts

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.

Looking ahead, traders are focusing on the pair's ability to hold the upper boundary of its 1.1400-1.1800 range, though authoritative real-time price levels are currently unavailable. 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.