EUR/USD continues to extend its recent move lower, approaching a key post-ECB low of 1.3503, notes BNP Paribas.
“Although the FX move does not appear fully supported by a corresponding rise in front-end US yields, we note that 2y real rate differentials have moved against EURUSD over the past several days on the back of a pullback in US inflation expectations (see chart),” BNP adds.
“For the moment we suspect markets remain inclined to play the range, but the break of the previous 1.3503 low would be significant from a technical perspective and could trigger some additional momentum-driven selling,” BNP projects.
In line with this view, BNP holds short EUR/USD from 1.3620 targeting 1.32.
