As EUR/USD trades below 1.07, the question is: where now? Can we expect a bounce, that has been elusive so far, or a continued fall. The team at BNP Paribas analyzes: Here is their view, courtesy of eFXnews: BNP Paribas’ consistent bearish EUR stance has been massively paying off for sometime now with BNPP hitting target in early January on its EUR/USD short from 1.2520 at 1.1820 and again today on its EUR/USD short from 1.1450 at 1.08. But BNPP doesn’t seem to have enough yet of this short trade. Here is BNPP’s latest view on the direction of EUR/USD going into next week’s FOMC along with the details of its current short EUR/USD position. ‘Patient’ To Go Next Week: “The dollar is likely to remain well supported on pullbacks now, with market participants increasingly anticipating the Fed may drop its “patient” language at next week’s FOMC meeting, setting the stage for a hike in June or September”, says BNPP. USD Set To Follow Rates higher: Thus, as the USD has typically followed US front-end rates higher in the months heading into the start of a Fed rate hike cycle, BNPP believes that real yield differentials will move against the EUR and in favour of the USD during 2015, thus further weakening EURUSD. “A breakdown of the real yield components reveals that rising inflation expectations in both the US and the eurozone are the key drivers of 2y real yields. At the same time, nominal yields in the two regions have diverged, as eurozone 2y rates hit new lows. This divergence likely reveals the different market implications of higher inflation in the US vs the eurozone,” BNPP clarifies. Prescribed ‘Cocktail’ For Weaker EUR/USD: “Amid this environment, rising inflation expectations merely have the effect of taking real yields more negative, thus weakening the EUR,” BNPP adds. All in all, BNPP argues that the combination of these two factors (rising US yields and EZ inflation expectations) is ‘the prescribed cocktail that will push the EURUSD even weaker’. EUR/USD: The Trade. BNPP maintains short EUR/USD from 1.1450, extending the target today on this trade to 1.05 from 1.08 and trailing the stop to 1.10 to lock in roughly 4% gains. 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. Yohay's Google Profile View All Post By Yohay Elam EUR/USD Daily share Read Next Draghi sends EUR/USD below 1.0650 Yohay Elam 8 years As EUR/USD trades below 1.07, the question is: where now? Can we expect a bounce, that has been elusive so far, or a continued fall. The team at BNP Paribas analyzes: Here is their view, courtesy of eFXnews: BNP Paribas' consistent bearish EUR stance has been massively paying off for sometime now with BNPP hitting target in early January on its EUR/USD short from 1.2520 at 1.1820 and again today on its EUR/USD short from 1.1450 at 1.08. But BNPP doesn't seem to have enough yet of this short trade. Here is BNPP's latest view on the direction of EUR/USD… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.