Back
23 Jan 2015
EUR/USD projections for 1.05 2016 - BAML
FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch explained that following the aggressive ECB action, Bank of America Merrill Lynch is marking to market its EUR/USD projections, keeping a weakening path.
Key Quotes:
"Ahead of the most anticipated ECB meeting in recent years, we had argued that the risks for EUR/USD were balanced, but also pointed to downside risks to our projections," BofA argues. "We still see a gradual weakening of the Euro as Fed and ECB monetary policies diverge."
"After this week’s ECB policy announcements, we do not expect any aggressive further steps for the rest of the year. Our US economists expect the Fed to start hiking rates in September, with risks that it may be later. Such a divergence of monetary policies should continue weighing on EUR/USD in the long term, but it will have to be faster than markets currently expect to lead to a much further weakening of the Euro in the short-term. Moreover, short positioning could suggest some small upside Euro risks in the short term from profit takin. "We are now projecting EUR/USD at 1.10 by the end of 2015 and 1.05 by the end of 2016, a change from 1.20 and 1.15 respectively before."
Key Quotes:
"Ahead of the most anticipated ECB meeting in recent years, we had argued that the risks for EUR/USD were balanced, but also pointed to downside risks to our projections," BofA argues. "We still see a gradual weakening of the Euro as Fed and ECB monetary policies diverge."
"After this week’s ECB policy announcements, we do not expect any aggressive further steps for the rest of the year. Our US economists expect the Fed to start hiking rates in September, with risks that it may be later. Such a divergence of monetary policies should continue weighing on EUR/USD in the long term, but it will have to be faster than markets currently expect to lead to a much further weakening of the Euro in the short-term. Moreover, short positioning could suggest some small upside Euro risks in the short term from profit takin. "We are now projecting EUR/USD at 1.10 by the end of 2015 and 1.05 by the end of 2016, a change from 1.20 and 1.15 respectively before."