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EUR/USD fell some 800 pips from the highs and is looking for a new direction. What’s next?

Here is their view, courtesy of eFXdata:

EUR/USD: No Compelling Reason To Turn Tactically Bullish Here – Citi

Citi discusses EUR/USD outlook and maintains a tactical bearish in the near-term.

“EUR could trade weaker given poor sentiment surrounding the Italian coalition government.

Taking our cue from BTP/Bund spreads and the impending ECB meeting in June, in which we feel market participants hoping for a policy U-turn might be disappointed.

We don’t see any compelling reason why the EUR should find any significant support here,” Citi argues.

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EUR/USD: Resilient To Widening In BTP/Bund Spread For Mow; What’s Next? – BTMU

BTMU Research discusses EUR/USD outlook in light of the  ongoing widening of the Italian/German yield spread.  

“Yesterday was the fourth day since the 10yr Italian spread over German bunds began to move sharply and most worryingly the move we had yesterday was the largest widening yet.

While EUR/USD looked remarkably resilient to the sharp move higher in the BTPBund spread yesterday, downside risks remain significant.  We still see the relative macro driver as important in this move,” BTMU argues.

If we see further widening or even if these levels are sustained, EUR/USD rebounding back to the mid-1.2000 levels is difficult to envisage  and some adjustment lower in our EUR/USD forecasts will be required,” BTMU adds.

EUR/USD: Could Stay Offered N-Term As Long As Italian Situation Remains Unsolved – Barclays

Barclays Research discusses EUR/USD outlook in light of the  latest Italian political developments.

“The Italian political situation and its effect on BTPs and other EA peripheral bond markets will likely be the single most important driver for the EUR this week.

While our rates strategists do not see the recent BTP weakness as the beginning of a structural widening trend,  we think near-term uncertainty will continue to pressure the EUR  and increase the risk that the positive tone held by rating agencies on Italy reverse.

Hence, contrary to our earlier expectations of near-term EURUSD consolidation given the rapidity of the recent USD move,  we expect the EUR to remain under pressure as long as the Italian political situation remains unresolved,” Barclays argues

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