EUR: Outlook On CB Reverse Flows Supports Our Bearish EUR/USD View – BofAML

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EUR/USD is moving up and down but has not picked a clear direction. What’s next for the pair?

Here is their view, courtesy of eFXdata:

Bank of America Merrill Lynch discusses the EUR outlook in light of the latest Q1 COFER data.

“The increase in EUR share of reserves in Q1 (from 20.2% to 20.4%) was less than expected…That said, we are less optimistic about the prospects of further CB diversification into EUR over coming quarters. The widening in Italian spreads in late May and rising uncertainty on institutional reforms in the Eurozone will likely dampen demand for EUR assets. 

The turn in sentiment towards EUR reserve holdings should also support our bearish EUR/USD forecasts as the headwinds from the official sector dissipate into Q3, allowing the USD to benefit more from strong fundamentals and repatriation flows,” BofAML argues. 

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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 the 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.