Currently the pair is pricing at 1.2305 and sentiment points lower but according to HBSC the EUR/USD could jump back to 1.2500 in the month ahead. "If we start to move from a liquidity based proposition to one where value matters, this process will leave the USD vulnerable," comments the HBSC analysis team.
"The mistake the FX market could make currently is to “now-cast” rather than “forecast”, crafting an FX profile based on today’s market paradigm," continues the bank analysis. "The consensus has taken this approach, the spot rate is 1.24 and the 1 month forecast is 1.25, the 3 month forecast is 1.25 and the 12 month forecast is also 1.25."
"We believe recent progress in Europe and the approaching US presidential elections will foster a new paradigm, one which replaces the current ambiguous USD reaction to weak US numbers to a more straightforward USD sell signal," concluded HBSC bank.