EUR/USD is moving up and down but has not picked a clear direction. What’s next for the pair?
Here is their view, courtesy of eFXdata:
Bank of America Merrill Lynch discusses the EUR outlook in light of the latest Q1 COFER data.
“The increase in EUR share of reserves in Q1 (from 20.2% to 20.4%) was less than expected…That said, we are less optimistic about the prospects of further CB diversification into EUR over coming quarters. The widening in Italian spreads in late May and rising uncertainty on institutional reforms in the Eurozone will likely dampen demand for EUR assets.
The turn in sentiment towards EUR reserve holdings should also support our bearish EUR/USD forecasts as the headwinds from the official sector dissipate into Q3, allowing the USD to benefit more from strong fundamentals and repatriation flows,” BofAML argues.
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