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Investing.com - The euro has been on the up this year, likely benefitting from the equity rotation into Europe, and Bank of America Securities sees the potential for even more gains.
At 08:30 ET (12:30 GMT), EUR/USD traded 0.% lower at $1.1334, but is still over 3% higher over the course of the last week, and over 9% higher so far this year.
“The strong EURUSD demand by both Hedge Funds and, particularly, Real Money clearly stands out,” said analysts at Bank of America Securities, in a note dated April 14.
“This was the strongest Real Money USD selling since Jun-23 and the strongest EUR buying since Nov-23, according to our proprietary investor FX flows.”
Real Money is seen as traders working for the likes of pension funds, asset managers and insurance companies. They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intra-day speculators.
The bank previously that stronger Real Money participation would be key for EURUSD to push higher. Even after last week’s demand, the Real Money EURUSD position is light versus its post-2012 history.
“Indeed, our recent sentiment survey suggests there is room for more USD selling,” BofA said.
Real Money investors in all three regions have been buying EURUSD in recent weeks, although to a varying extent, the bank said.
In the Americas, Real Money has been the keenest to sell the USD vs EUR in recent months.
In Europe, Middle East and Africa, Real Money started buying the euro – even if modestly – after the German fiscal developments.
While in Asia-Pacific, Real Money remained skeptical until essentially last week, when their euro demand rose to the strongest level the bank has seen in its own flows since Sep-2020.
“We also see scope for further gains in case European-based investors ‘simply’ increased the hedge ratios of their U.S. equity exposure,” BofA Securities said.