As the severe global recession continues, what is the outlook for USD, particularly EUR/USD and USD/JPY?
Here is their view, courtesy of eFXdata:
Bank of America Global Research discusses the USD outlook and maintains a bullish bias through year-end. BofA targets EUR/USD at 1.05 and USD/JPY at 103 by year-end.
“We expect recent USD losses to reverse over the coming months, as severe global recession, US economic outperformance and renewed financial market stress support USD demand and keep the dollar in overvalued territory.
Notably, we are concerned about the extent to which global markets are optimistically priced for v-shaped recovery, vaccine availability, temporary employment losses and lack of solvency problems in the SME and corporate sectors,” BofA notes.
“We continue to think that the steep US recession can outperform many areas, in particular Europe, where large downside risks persist amid weak policy coordination and high debt levels,” BofA adds.
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