EUR/USD is gradually sliding after topping 1.15 last week. What’s next?
Here is their view, courtesy of eFXdata:
Bank of America Merrill Lynch Research discusses EUR/USD outlook in light of revising down its forecast to 1.16 in Q1, while maintains its bullish targets towards 1.25 by year-end.
“EURUSD is trapped between offsetting forces. On the one hand, Washington brinkmanship reinforces negative US data seasonality in Q1 and the overall weakening of the US economy as the impact from last year‘s strong fiscal stimulus fades. On the other hand, the Eurozone data keeps surprising to the downside, suggesting a slowing of the economy that goes beyond one-off factors. As a result, EURUSD has been in a tight range, failing to rally or weaken significantly in response to overall USD moves or changes in risk sentiment,” BofAML notes.
“On balance, we see negative EUR risks in the short term but remain constructive in the medium term….We continue to forecasts EURUSD at 1.25 by the end of this year, but we bring down our Q1 forecast from 1.20 to 1.16, given downside risks from weak data,” BofAML adds.
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