JP Morgan EUR/USD, Key Points:
1. European Growth Data Loses Momentum: The weakening trend in European growth data continues to intensify and extend, manifesting increasingly in hard data and bolstering JP Morgan’s bearish narrative on the euro. Despite this, the currency remains unexpectedly resilient.
2. Depressed PMIs and High Positioning in EUR: The drop in the latest PMIs was significant, with services catching down to the depressed manufacturing sector. Positioning in EUR remains high, implying scope for further reduction in longs.
3. Growth Downgrades and Bearish Bias: The abundance of deteriorating growth signals such as EASIs, PMIs, IFO, and continuous downside surprises in China are matched by growth downgrades from the bank’s economists.
JP Morgan maintains its bearish bias for the second half of 2023, targeting EUR/USD at 1.05 due to the growth divergence. Then anticipates a recovery towards 1.20 post-recession in 2024.
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Weekly EURUSD