BofA says EUR/USD shorts look primed for the summer

Bank of America has issued a bearish outlook on EUR/USD, suggesting that short positions on the pair are well-primed for the summer months. The call comes ahead of the European Central Bank policy decision later today, with the firm arguing that markets are underestimating the diverging growth paths between the United States and the euro area.

For currency traders, the BofA view highlights a key theme: the interest rate differential between the Fed and the ECB could widen further if the US economy continues to outperform. The bank notes that EUR/USD could potentially trade through its Q2 forecast of 1.14, which is just below 12-month lows. The growth divergence is notable and arguably underpriced by rates markets, according to the firm. Additionally, the ongoing Middle East conflict adds a layer of uncertainty that could keep the euro under pressure, as safe-haven flows favor the dollar. Live FX prices and charts on NowPrice show how the market is reacting to these dynamics in real time.

Looking ahead, traders should watch for the ECB decision and subsequent commentary for any hints of policy divergence. BofA's view suggests that any rally in EUR/USD may be short-lived, with the pair likely to test lower levels if the growth gap persists. The summer months could see increased volatility, especially if geopolitical tensions escalate or if US data continues to surprise to the upside.