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On Monday, Bank of America (BofA) analysts provided an optimistic outlook on the Euro, suggesting that the EURUSD currency pair may have further room to grow.
Despite a more than 4% rise in March, BofA analysts believe the Euro has not fully reflected the changes in interest rate differentials and relative equity market performance.
According to BofA, the market remains short on the EURUSD, even after some adjustments in positioning earlier this year. The latest flows indicated a meaningful demand for the Euro, yet this demand was considered underwhelming in light of significant European Union reforms.
Bank of America revised its EURUSD forecasts upward, now predicting the pair will reach 1.15 by the end of 2025, up from the previous forecast of 1.10. For the end of 2026, the forecast was adjusted to 1.20 from an earlier prediction of 1.15.
The firm cited bullish technical indicators for the EURUSD and suggested that if patterns from 2017 were to repeat, the upside could be significant, potentially reaching 1.20.
Despite the Euro’s recent appreciation, it has only attained its post-2022 average of 1.08. BofA highlighted that the Euro remains well below its historic average of 1.19, the post-Eurozone crisis and pre-Covid average of 1.13, and the post-global financial crisis average of 1.20.
BofA analysts argue that the ambitious reforms currently in progress within the EU could elevate the Euro back to these higher levels.
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