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Investing.com - The euro has strengthened in recent weeks against several currencies including the U.S. dollar, Swedish krona, Norwegian krone, and British pound, according to a new UBS analysis.
UBS attributes the euro’s strength to multiple factors, including the likely end of the European Central Bank’s easing cycle, a more front-loaded German fiscal package, and a successful NATO summit.
Following this strong performance, UBS expects the euro to lose some ground against its European peers, while consolidation against the U.S. dollar appears more likely than continued appreciation.
UBS maintains its forecast that EUR/USD will move within a 1.15-1.20 range during the second half of the year, recommending investors use any U.S. dollar weakness to reduce dollar exposure or increase hedge ratios.
The bank sees the greatest opportunities in the Scandinavian currencies and the Australian dollar, specifically recommending selling the euro outright against the Swedish krona and Norwegian krone, while yield pickup strategies against the U.S. dollar, Swiss franc, and British pound "do not look attractive" given UBS’s longer-term outlook.
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