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