Bank of America Global Research discusses EUR/USD outlook and maintains a medium-term conservative constructive bias, targeting the pair at 1.15 by year-end.
"With risk appetite having reached extended levels on the back of the recent relief rally, we think that additional USD downside could prove limited absent evidence of reflationary activity. Economic data have stabilized but as yet don't confirm a vigorous rebound. The good news is that pessimism looks overdone, and a positive global economic outcome remains underpriced. We continue to monitor the data carefully to confirm our priors," BofA notes.
"We forecast EURUSD at 1.15 by the end of this year. We consider it to be a conservative estimate, being well below our equilibrium estimate of 1.20-1.25. The market is slightly short USD according to our estimates, but overall positioning is far from stretched. The trajectory of relative data justifies a weaker USD, in our view. And looking ahead, we expect relative growth to gradually shift increasingly against the USD. We see the risk of a hawkish ECB surprise later in the year and generally see other risks as skewed to the downside for USD," BofA adds.