BNP Paribas closed out a EUR/USD short trade at its breakeven price on Monday but is looking for another opportunity to sell.
Falling commodity prices have continued to undercut Fed rate hike expectations, and this loss of rate support has, in turn, undermined the USD, primarily against the core low yielder currencies, notes BNP Paribas.
"We expect the Fed to possibly drop their reference to stabilization in commodities markets in their statement Wednesday, and we continue to view this meeting as unlikely to deliver a hawkish signal," BNPP projects.
"However, an eventual stabilization in commodity prices would leave the EUR vulnerable again, particularly as our position indicator suggests EUR short positioning has now been completely erased," BNPP argues.
"We closed our short EURUSD trade flat at entry on Monday as the pair traded back up through our trailing stop. However, we remain constructive on the USD and continue to watch for good risk-reward opportunities to reengage," BNPP advises.
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