Since May 1st high of 1.3240, the EUR/USD has collapsed around 440 pips to May 17th lows of 1.2800. Currently the pair is trading at 1.2860, after pricing in range between in 1.2840 and 1.2900 in the last two sessions.
The RBS analyst comments that he has "no argument with EUR/USD lower either and have long forecast sub 1.20 levels for this year. EUR/USD could be the low-score-bore-draw that it’s been for ages, either side of 1.30, for longee."
However, "just as the Fed tapering chat meanders on, so markets get (rightly) much more serious about an easier ECB: Rates strategy colleagues’ bias is still for 10y US/bunds to widen; 2y Germany is rallying, back to negative yields; ECB dated EONIA traded negative Friday) for the first time this year," Simmonds points.
"We anticipate being dollar buyers/accumulators all year. Initially against yen and GBP, then against EUR. But before year end will be time for limit USD longs against Aussie and Kiwi and beyond in the commodity complex," RBS concludes.