EUR/USD likely to trade around 1.10 by end-2017, says Scotiabank

In May, the euro has begun at the upper end of its multi-month range at around 1.09 with recent gains driven by market participants’ assessment of changing political risk in France after the first round of the presidential election, stated Scotiabank in a research report.

“We remain bearish on the basis of fundamentals and the outlook for policy divergence between an accommodative ECB and a tightening Fed”, said Scotiabank.

CFTC positioning in EUR is comparatively neutral, but details indicate gross longs close to record levels. Options markets seem positive, pricing a comparatively low premium for protection against the weakness of the euro.

“We remain short-term EUR bears with a Q2 target at 1.02. We are more constructive toward year end with a 1.10 Q4 forecast”.