Scanning some of the bank notes, noting the euro bear calls. A couple of examples:

ING:

  • EUR/USD to test 1.10
  • careful of temporary short squeeze rallies in the pair

Citing:

  • US-China trade tension unresolved
  • risk later this month that rump opts for tariffs on auto imports from the EU
  • there are a few green shoots for European growth but not enough to see EUR are rates rise
  • ECB to announce TLTRO III in June - should keep EUR rates stay lower for longer
  • And, on politics - "A good showing from Salvini's League in European elections end month also raises the risk of new Italian elections later this year."

BMO:

  • Kick off with political risks for the EUR - risks facing the currency will remain biased to the downside, through the parliamentary elections in May and into the second half of 2019.
  • On the central bank - We anticipate further dovish pivots from the ECB over the balance of the year
  • EURUSD .... see the pair trading at 1.09 in 3M

Do note though, BMO have this …. one upside risk to our bearish EUR call worth mentioning in the form of growth-positive fiscal policy.

  • conceivable that at some point, an agreement amongst member states and the Eurogroup could be reached, aimed at relaxing the bloc's draconian fiscal rules.
  • Such an agreement would be a significant short-run positive for the EUR
  • At this stage, we assign this scenario a very low probability, but with so many moving parts in play, including international trade tensions, this is a risk worth monitoring.