Are the banks reversing their parity calls?

I'm just looking through the bank analysis over at our friends at eFX News and the standout theme is that a lot of the banks are changing their tune on the euro. Here's a brief selection.

SocGen

EURUSD is trading through 1.08 with no significant US or Eurozone econ data.

"...Given that the underlying sentiment towards the Euro remains negative, this may be enough to trigger a final round of capitulation by Euro shorts,"

Nomura

They tip September for the ECB to start talking tapering.

"We expect the combination of diminishing political risk premium and steps toward ECB policy normalisation to strengthen EUR broadly into H2 this year,"

They add that: EUR upside risks could be more significant in the near-term if ECB members continue to suggest weaker commitment to the current forward guidance.

Danske

  • Expects EURUSD is close to forming a base

  • Believes it unlikely Le Pen will win the presidency and so the election will not hinder a gradual uptick in EURUSD

  • Revises its EUR/USD forecasts higher predicting the cross at 1.06 in 1M(1.04 previously),1.08 (1.05), 1.10 (1.08) and 1.14 (1.12)

"Medium-term, we continue to expect EUR/USD to move higher on the large eurozone-US current account differential and the undervaluation of the EUR,"

As ever though, there's always two sides to the story and not everyone is giving up on a weaker euro.

Barclays

"Further strength, however, is unlikely given the significant yield and cyclical disadvantage versus the US,"

Credit Agricole

"Any rally in EUR/USD to 1.08 and above should, in our view, offer an attractive opportunity to short the pair anew,"

Looking at the forecasts, there's only a few still pumping for parity by year-end;

  • ANZ 1.0000

  • BNPP 1.0000

  • Barclays 0.9900

  • Citi 0.9800

  • Deutsche Bank 0.9500

  • Morgan Stanley 0.9700

To see a whole host of bank notes and forecasts, have a look at eFX News here.