Euro's Route to 1.20 Hinges on Fed Response

The Euro to Dollar exchange rate (EUR/USD) closed Friday at 1.1599, down 0.10% on the day.

This decline came as stronger US core inflation reinforced expectations of a Federal Reserve rate increase.

MUFG's rates strategists now expect the Fed to hike rates by 25bps in September, citing the August CPI release which showed core prices rising 0.3% on the month, accelerating from July's 0.2% increase and exceeding the 0.2% consensus.

The bank's downside scenario points towards 1.14, approximately 1.7% below that close.