BNP Paribas FX Strategy Research on EUR/USD
BNP Paribas FX Strategy Research notes that EUR/USD appears to be topping out with momentum model signals that EUR momentum has peaked, while positioning analysis framework suggests EUR/USD positioning is stretched long.
"A compelling case could be made for entering EURUSD shorts at this time, targeting a move down towards our 1.13 year-end target for the pair," BNPP argues.
While a tactical short EURUSD spot position may well play out favourably over the next two weeks, we think the risk-reward would be more attractive to position for a more meaningful move lower later this year," BNPP advises.
As such, BNPP prefers to play EUR/USD via an optionality structure via adding a bearish EUR/USD bearish one-touch calendar spread.
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