BoA says there is a strong consensus against the US dollar

  • this is facing challenges
  • the dollar has begun adjusting

Ths have dropped their end-2021 forecast to 1.15 from previously at 1.25

BoA citing catalysts for dollar strength:

  • Fed and ECB policy divergence
  • the potential for substantial US fiscal stimulus
  • analysts are looking for twice as fast US recovery than for the euro zone
  • a still-short USD market position, particularly against the EUR
  • challenging outlook for risk assets given stretched valuations and substantial uncertainty

Forecasts EUR/USD

  • 1.18 (1.22 prior) in June
  • 1.16 (1.24) in September