Bank of America Merrill Lynch FX Strategy Research has revised its EUR/USD projections upward, but retains a bearish path for year-end.
BofAML now expect EUR/USD to weaken towards 1.18 by end of September and towards 1.15 by year-end for the following 4 reasons.
1- Central bank policies .BofAML sees asymmetric risks for a hawkish Fed surprise and a dovish ECB surprise this fall
2- OiL: BofAML pointed out that EUR/USD and oil prices have diverged, which keeps BofAML cautiously optimistic for USD in the medium term.
3- Positioning: BofAML notes that while long EUR position is not stretched, it is the longest it has been in recent years.
4- Quant: BofAML quant models point to downside EUR/USD risks.
Source: Bank of America Merrill Lynch Rates and Currencies ResearchOriginal Article
