EUR/USD Lower For Longer – But Not

We revise lower our EUR/USD forecast profile as a hesitant ECB and USD carry will keep the cross lower for longer. The next big move remains higher though.

We now see limited upside potential on a 6M horizon, which makes risk reversals attractive relative to forwards for hedging USD income/assets at this horizon.

EUR/USD has been a rollercoaster recently and in last week’s FX Strategy: EUR/USD stuck in the mud (below 1.20) for longer, we emphasised the case for EUR/USD to be lower for longer. We now opt to revise down our forecast profile for the cross, but we maintain that the next big move in the cross will still be higher, see Chart 1.

To read the entire report Please click on the pdf File Below:

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