Strategists at Bank of America say the loss of competitiveness in the periphery due to the euro could be reversed by a 20% decline of EUR/USD. They say that would reduce about half of Italy’s loss of competitiveness since the introduction of the currency.
BofA has a near-term 1.20 target in EUR/USD but analysts say downside risks are increasing. They see value in buying a 1.10 EUR/USD 6-month one-touch option that pays 5-to-1.
