JPMorgan lowered its Q1 2015 EUR/USD estimate to 1.28 from 1.30. Lowers Q2 2015 estimate to 1.26 from 1.28.
With JPMorgan and Goldman lowering forecasts in quick succession, it gives you the sense that too much money has poured into euro shorts too quickly.
Update with more details: They left their year-end forecast at 1.30 and say that any QE remains a risk scenario for next year rather than a base case for the rest of 2014 or 2015. However, the probability of QE from the ECB has increased to more than 30% by year-end and almost 50% next year.
They recommend continued EUR/USD, EUR/CHF and GBP/USD shorts.
Next week they expect the ECB to cut the refi and deposit rates by 10 basis points and remove the spread on the TLTRO and potentially increase next week’s TLTRO’s allowance.
