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Time To Be More Tactical; These 2 Non-USD Trades Attractive - BofA Merrill
We remain bullish on the USD for the year, but see short-term risks. Elevated US uncertainties make non-USD trades attractive to us. We have been arguing for EUR/JPY upside, as we believe that the BoJ has more credibility than the ECB. EUR/JPY has appreciated by 8% since then, but our year-ahead report argued for further strength. We forecast EUR/JPY at 126 by the end of the year, with risks to the upside. We stick to our contrarian year-ahead short EUR/GBP trade. UK data remains very strong, despite Brexit uncertainties. We do expect GBP to weaken following activation of Article 50 in Q1. However, ... (full story)