Deutsche Bank is reiterating its bearish view on EUR/USD but says if it’s going to play out, it will have to begin in the next few weeks.
They say rising US Treasury yields, along with a bear steeping of the yield curve, suggests the fair value of EUR/USD is below 1.3000. The driver for euro out performance has been inflows into European equities but they note that January balance of payments data showed a liquidation in a sign the trend could be turning. In addition, March ETF flows are negative.
They also note that the upside is in EUR/USD may be protected by ECB rhetoric.
