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BNP Paribas lowered EUR/USD forecast

Strategists at BNP Paribas have revised down their Q2 EUR/USD forecast from 1.3700  to 1.3500.

"Consistent with our economists’ forecasts for a deposit rate cut in June and acknowledging that the ECB’s recent FX rhetoric has limited EURUSD’s near-term upside, we have revised down our Q2 forecast to 1.35 from 1.37," BNPP outlines the rationale behind this revision.

"In the absence of further ECB action, EURUSD weakness towards 1.30 is likely to materialise gradually, in line with the improvement in the US economy and the shift to a less accommodative Fed policy," BNPP argues.

"However, our base case is that the ECB delivers QE in Q3 which should bring about an acceleration in the pace of the EURUSD’s decline, pushing it below 1.30," they add.

"We continue to see EURUSD at 1.26 by year-end," BNPP forecasts.

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