EUR shorts likely to build further with 1.09 target in sight for EURUSD - BNPP

Economists at BNP Paribas, expects the Eurozone economic sentiment survey to fall 0.4 to 104.3 in June.

Key Quotes

“The survey will have been conducted before the UK referendum, but the survey should still show softening in line with the Eurozone PMI and French INSEE index declining on the month. Market volatility, the slight appreciation of the EUR and the rise in the oil price are factors that may have weighed on confidence. Eurozone survey data have been trending downwards since the turn of the year, suggesting the economy has lost some steam.

Furthermore, our economists think the UK’s decision to leave the EU will shave about 0.5% off Eurozone GDP in 2016-17. We note that short EUR positioning is significantly lighter than short GBP positioning and expect market participants to build EUR short positions due to political contagion from the UK developments. We target 1.09 in EURUSD in the near-term.”