Home Resell EUR/USD to 1.04 – BNPP
Opinions

Resell EUR/USD to 1.04 – BNPP

The US dollar is on the rise again and the euro begins to feel the heat.  Is there more room to go?

The team at BNP Paribas certainly thinks so and sets a low target:

Here is their view, courtesy of eFXnews:

The USD has relatively retreated in the aftermath of the 18 March FOMC statement.

However, BNP Paribas believes the liquidation of USD positions so far has largely been confined to shorter-term market participants and momentum traders, while Longer-term oriented macro accounts are unlikely to have capitulated on their high conviction bullish USD views.

As such, BNPP advises its clients in its weekly note to ‘stick to the plan’ and keep reselling EUR/USD rebounds. Here is BNPP’s rationale behind this call along with the details of its recent short EUR/USD position

Eurozone investors are likely to remain sellers of the EUR on rallies

“Our positioning indicators suggest EURUSD positioning has not become stretched, and presumably positions have been reduced even further in this latest push higher. Moreover, we believe eurozone investors are likely to remain reliable sellers of the EUR,” BNPP argues.

EURUSD can move lower with real yield differentials

Market to reprice for tighter Fed policy again:

“We also see scope for the markets to reprice for a sooner Fed policy tightening…With most FOMC members still projecting two rate hikes before year-end, we think it will take a significant deterioration in labour market data or further weakness in inflation to prevent an earlier tightening.  We suspect Fed speakers and data in the weeks ahead are likely to guide the markets back to pricing for a September lift-off,” BNPP projects.

The trade: EUR/USD short:

In line with this view, BNPP maintains a short EUR/USD from early this week from 1.0990 with a target 1.04 and a stop at 1.1165.

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.