MUFG Research maintains a bearish bias on EUR/USD, expressing this view via a short exposure in spot targeting a move towards 0/9760.
"We expect the EUR’s bearish trend to remain in place. EUR weakness could even accelerate when EUR/USD breaks below parity, and opens the door for EUR/USD to trade between 0.9500 and 1.0000," MUFG notes.
"We have added a new short EUR/USD trade idea to reflect our increased confidence that the pair will soon break below party," MUFG adds.
ING Research also discusses the EUR/USD outlook and sees a scope for move towards 0.98/0.95 over the coming weeks.
"As we put pen to paper, EUR/USD is within striking distance of parity. The stagflationary effects of the war in Ukraine are being felt far more in Europe than in N. America. Thus, short term rate spreads continue to move against EUR/USD as does the risk environment, where equities could have another 10% leg lower," ING notes.
"Based on recent correlations, a 10% fall in equities and a 25bp widening in spreads this summer would put EUR/USD somewhere near 0.98. A 50bp widening in spreads, were the Fed to move more aggressively or ECB hawks to soften, would be worth 0.95.
Don’t look for a substantial turn higher in EUR/USD this summer, since it seems far too early for Fed hawks to back down," ING adds.
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