Investing.com – The forex market is turning bearish against the US dollar, according to Bank of America Securities, suggesting EUR/USD is on the verge of a bullish breakout.
The skew in US dollar put options has changed significantly over the past week, the bank said in a May 13 report, with European investors completely unwinding long US dollar positions since last month.
It was trading 0.2% higher at $1.0812 at 10:20 a.m. ET (1420 GMT), even after U.S. growth was faster than expected by 0 in April. .5% on a monthly basis, which is a sign of persistent inflationary pressure at the beginning of the year. second quarter.
The currency options position on Wednesday is biased towards US weakness, the bank added, amid broader expectations for overall monthly growth of 0.4% and annual growth of 3.4%.
The key index, which excludes volatile food and energy prices, is expected to rise 0.3% month-on-month in April and 3.6% year-on-year.
“We expect EURUSD to rally, which will also clear the following 50-week and 100-day SMA resistances around 1.0823-1.0828 if the US core CPI falls this week,” the bank said, adding the core CPI prices since the beginning of the year. The US annual report unexpectedly exceeded the median for four months in a row.
Even the operational inflation footprint should ease some of the nagging inflation worries among investors.
As a result, “we are bullish on EUR/USD this week and see the pair breaking out of its year-to-date downtrend if core US CPI falls for the first time in 2024.”
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