The euro is on a roll following the French elections and hopes for a more upbeat ECB tomorrow. What does this mean? Here are two banks suggesting buying dips in EUR/USD and EUR/JPY:
Here is their view, courtesy of eFXnews:
EUR: Investors Shifting To A Buy-The-Dip Strategy: Levels & Targets – ING
ING FX Strategy Research argues that investors are likely shifting to a ‘buy-the-dip’ strategy in EUR/USD even if the expectations of US fiscal policy could limit further upside in the near-term.
In that regard, ING thinks that a dip in EUR/USD into the 1.0740-80 region looks a buy targeting 1.12/13 into June.
ING also recommends long EUR/JPY on the ground of a sustained EUR recovery and a return of the Trump reflation trade.
ING thinks a dip in EUR/JPY into 118 looks a buy targeting 124.
EUR/USD is trading circa 1.0937 and EUR/JPY is trading circa 121.64 as of writing.
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EUR: ‘No Need To Rush’ From ECB; What’s The Trade? – BofAML
Bank of America Merrill Lynch FX Strategy Research expects the ECB Governing Council to leave the current stance and communication largely unchanged at its policy meeting on Thursday.
“While we do not expect any hard decision or any significant communication surprise this week, we also believe the policy conversation could be quite fierce from June,” BofAML adds.
In that regard, BofAML continues to think that in the face of a still subdued inflation outlook, prudence will prevail and the ECB will opt for small changes to forward guidance in June, slow tapering in 2018 and no policy rate hike before well into next year.
EUR: Buy EUR/JPY on dips.
BofAMl doesn’t see direct FX implications from the ECB meeting this week, but argues that the stage is set to start buying EUR/JPY again.
“In this context, we would look to take advantage of any EUR dip if the ECB sounds too dovish this week to buy EUR/JPY,” BofAML recommends.
EUR/JPY is trading circa 121.30 as of writing.
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