EUR/USD Stuck at Resistance as MUFG Warns of Euro Overvaluation

The EUR/USD exchange rate has been unable to break through the 1.1630 resistance level, according to MUFG's analysis.

Despite softer expectations for Federal Reserve tightening, which should have given the Euro more room to run, it hasn't quite happened.

MUFG sees a 'high level of caution in buying EUR/USD' and warns that the pair is already overvalued by 2.5-3.0% based on their short-term regression model.

The concern lies in Europe's energy exposure, particularly with European gas storage running below comparable years since 2011 and delayed winter purchases potentially becoming more expensive due to Asian LNG demand competing for supply.