EUR/USD topped 1.25 on Draghi’s weak jawboning but fell back down when Trump trumped up the dollar. What’s next?
Here is their view, courtesy of eFXnews:
EUR/USD: Flows To Drive Further M/T Strength; Valuation Models Point To 1.29; Dips A Buy – Danske
Danske Bank Research discusses EUR/USD outlook and thinks that the pair is prone for further medium-term strength through the coming months on the back of strong flows.
What we are witnessing at present may in an FX-context be summarised via the concept of broad basic balance of payments (BBoP) which combines the current account, portfolio and direct investment flows to capture the underlying commercial demand for a given currency.
“With the demand for euros in our view set to be underpinned by a reversal in euro-area portfolio flows and a continued current-account surplus, relative BBoP developments are likely to provide EUR/USD support for some time still,” Danske argues.
While we are closing in on fundamentally justified levels of EUR/USD (our valuation models suggest 1.29 for the cross), we stress that strong forces are driving the pair from either leg which in our view continue to make EUR/USD a buy on dips,” Danske concludes.
EUR/USD: A Round Of Profit-Taking; Looking For Opportunities To Buy Dips – Credit Agricole
Credit Agricole CIB Research discusses EUR/USD outlook and notes that its ongoing dip reflects a round of profit-taking as some EUR-positives and a lot of USD-negatives seem to be in the price by now.
“That said, we doubt that a trend reversal lower would be on the cards for the FX pair. Indeed, it seems that the EUR/USD rally since the start of 2018 largely reflects the recent sharp deterioration of the USD market sentiment of late.
To the extent that the USD-bashing continues in coming days, any dips in EUR/USD may prove attractive buying opportunities,” CACIB argues.
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