NAB Reserach discusses EUR/USD outlook and adopts a constructive view, expecting a test of the top range around 1.12 in the near-term.
"While it not always the case, EUR/USD can on occasions act as a low-beta GBP. For this to be so, FX investors need to think not only that GBP’s rise has further to run, but that the stars are aligning in areas such as economic growth and interest rates versus the US. All of this is a positive backdrop for the EUR, where short positioning appears to be aiding a rise in risk reversals into positive territory and now approaching multi-year highs," NAB notes.
"EUR/USD looks set to test our 1.12 range high, but at this stage 1.13 should provide resistance. This week sees the release of flash EZ PMIs which will be important for sentiment. The ECB meeting this Thursday will be Mr. Draghi’s last. There will be no new forecasts and we expect him to remind all and sundry on the risks and how the ECB can help. However, his hands are tied on pledging more action," NAB adds.