Bank of America Global Research maintains a structural bearish bias on EUR/USD targeting the pair at 1.02 by end of Q3.
"We remain skeptical of the global risk asset rally in light of economic and solvency risks. The global economy is contracting, and the hopes for a strong US recovery appear more limited. Our US Economics team cautions that while markets may feel it has moved past dismal data, the dataflow still has a long way to go, even as shutdowns begin to end," BofA notes.
"Although EURUSD is undervalued, by about 10% according to our estimates, we see it weakening further in the rest of the year...There are a number of reasons to expect EUR to weaken in the months ahead. We would focus on six in particular: a weaker global outlook; a severe Eurozone recession; a weaker Eurozone macro policy response, with fiscal stimulus smaller than in most other G10 economies and ECB monetary policy constraints; periphery sovereign risks from a sharp increase in government debt from already high levels; low oil prices, which historically has been correlated with a weaker EUR; and a long EUR market position," BofA adds.