EURUSD at risk – BNPP

Daniel Katzive, Research Analyst at BNP Paribas, thinks that the case for USD appreciation in 2017 remains strong, and it makes sense to add long dollar exposure during periods of reduced confidence in the outlook as market participants have reduced EUR shorts and USD longs in recent weeks.

Key Quotes

“We think the case for USD appreciation vs the EUR remains strong heading into Q2, and we continue to favour adding to USD longs on weakness. In our year-ahead road map, we noted a range of risks to the strong-dollar consensus, including US fiscal policy implementation risk, which we anticipated could generate periodic, violent reversals for the USD. With the underlying drivers of USD strength still in play, we think it is attractive to use periods of elevated doubt and reduced positioning to add exposure.”