Bank of America Global Research expects a USD rally in the coming month and expresses this view via going short NZD/USD in spot and short EUR/USD via options.
"Taking the dovish Fed as a given for now, we may still see some USD strength in May, given historically positive seasonality, following negative seasonality in April. We went short NZDUSD this week to tactically position for such seasonality. Technicals and quant are also supportive,"BofA notes.
"However, unless something unexpected happens, we see limited volatility in G10 FX in the short term, and before the Fed and the ECB move in opposite directions after the summer....To position, we went contrarian short EURUSD this week, via a 6-month put, to also take advantage of cheap vol," BofA adds.