Bank of America: Despite the rally, the Euro is still undervalued against the US dollar
The Euro (trade-weighted index) reached its highest levels in six years this week, growing by more than 7% in just 160 trading days. The last time it rose so rapidly was in 2017 - then ECB head Mario Draghi warned that the steep rise in the currency was a "source of uncertainty" for price stability. But now nobody thinks to resent the Euro rally.
Analysts believe that the long market for EUR/USD means that speculators bet on a higher range of the pair exchange rate, and this position could become "stretched" (excessive). Euro dynamics for the rest of the year will depend on the spread of coronavirus infection and the pace of recovery in Europe.
EUR/USD remains at 1.1850 after reaching a two-year high of 1.1908 earlier, according to the FactSet.