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Investing.com -- Bank of America (BofA) analysts updated their forecast for the EURUSD currency pair, increasing their target to 1.19 from the previous 1.15.
This adjustment comes after the pair reached BofA’s initial target on Sunday, with the latest spot hitting 1.1503. The firm initially went long on EUR/USD at 1.1061 on April 10, 2025, with a target of 1.15 and a stop/loss at 1.0750.
The revised target to 1.19 is accompanied by an increased stop/loss level, now set at 1.12. BofA’s reports suggest that the bullish case for the Euro against the US Dollar is supported by a range of factors, including the tarnished status of the USD due to unconventional and stagflationary policies in the United States.
These policies have led to higher US yields, a weaker USD, and underperformance of US equities compared to other global markets, while the Volatility Index (VIX) has been on the rise.
BofA analysts have cited US trade protection measures as detrimental to the US economy, potentially weakening the USD further. Moreover, they have noted that policy-induced volatility has been beneficial for the EUR. The Euro also finds support from ambitious reforms, fiscal expansion plans, and potential trade deals with other countries.
The firm’s reports indicate that the sharp rise in US foreign equity holdings and the significant drop in hedging during the post-Covid period point to substantial USD-hedging needs. Additionally, discussions on the end of US exceptionalism have reignited debates on de-dollarization.
While BofA remains bullish on EURUSD, they acknowledge risks to their trade. These include a potential pivot by the US towards more conventional economic policies or an expansion of the trade war beyond the US.
However, they currently see these scenarios as having a low probability. On the contrary, threats to the Federal Reserve’s independence could potentially push the USD even lower than BofA’s baseline expectations.
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