BoA/ML on the US dollar and the euro, from a client note
(via Bloomberg)
In summary:
USD has seen most of its upside
- But Italian budget discussions and ongoing global trade tensions could offer "one last leg" for a USD rally
This would offer a EUR/USD buying opportunity
- BoA look for EUR/USD below 1.15 in the near-term
- project 1.20 in 2019, citing ECB halting QE by the end of this 2018 & starting to hike in H2 of '19
BoA nominate risks to their view:
- outbreak of a full-scale trade war supporting a flight-to-quality bid for the dollar
- Italian budget discussions intensifying funding pressures
