Bank of America (BofA) analysts provided insights into currency market trends, pointing to a significant rally in the pair last week. This increase is due to the weak US CPI report. Bank of America signals indicate that the uptrend for the EUR/USD is likely to continue.
The bank's analysis pointed to options flows showing sustained demand for US dollar sell-offs, suggesting investors are betting on dollar weakness. In addition, the Bank of America's technical matrix revealed signs of a continued downtrend for the US dollar compared to major currencies such as the Euro (EUR), the British Pound (GBP), and the New Zealand Dollar (NZD).
Despite the positive trend in EURUSD, Bank of America warned that the momentum seen in rising risk-offs may not be as strong going forward. Analysts noted that the DXY index, which measures the dollar's strength against a basket of currencies, managed to close above the 200-day simple moving average (SMA), indicating a possible slowdown in the dollar's decline.
Furthermore, economists at Bank of America noted the absence of significant market-moving events from US economic data expected this week. Without new bearish catalysts for the US dollar, the currency's downward trend may not maintain the same pace observed last week.
This article was created with the power of artificial intelligence and reviewed by an editor. For more information, see our terms and conditions.
