EURUSD dip is a buying opportunity - BNPP

Research Team at BNP Paribas, are bullish on EURUSD from current levels and have established a long trade recommendation at 1.1290, targeting a rise to 1.1600, with a stop-loss placed at 1.1140.

Key Quotes

“Our expectations for EURUSD to continue to rise by mid-year. With a potentially more challenging risk environment ahead, the Fed is likely to remain dovish and the EUR will see upward pressure from its large current account surplus. The sharp unwind of net long EUR exposure last week according to our BNP Paribas Positioning Analysis adds to the upward potential.

Moreover, with the ECB struggling to lift inflation expectations real yield differentials have moved in favour of EURUSD. The ECB meets on Thursday and no action is expected following a package of measures announced at the previous meeting. While it’s possible that ECB President Draghi signals that the door to lower rates has not been fully closed, we don’t believe he will shift the message too much.

Elsewhere, the Riksbank also meets on Thursday and while we now expect no QE extension, this will be a close call. We remain bullish on SEK but we took profit on our short EURSEK recommendation this past week as we believe the Riksbank may become more worried with FX strength.”