📝Long-Term Yields Have Had An Increased Impact In EUR/USD: MUFG

This week saw the largest divergence between spot and our EUR/USD short-term fair-value model since September-2022. This follows bond market volatility buoyed by the collapse of Silicon Valley Bank and later turbulence in European banking sector sparked by investor fears around Credit Suisse. Monitoring the relationship between EUR/USD fundamentals and spot, our model (rolling 3yr) calculates a -2.48% undervaluation of spot. Current mis-valuation represented in the relative mis-valuation lies below the lower quartile.

The Beta fluctuation chart visualises how the impact of fundamentals drive fair value price action, in the past week economic trends in the manufacturing and service sector and long-term yields have had an increased impact. Whilst short-term yields and US equity volatility have decreased in impact. - MUFG