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New analysis from Bank of America (BofA) says the euro-to-dollar should endure a damp summer as near-term risks "remain skewed to the downside."
"We expect relative data to continue weighing on EURUSD over the summer and see room for the Fed to be repriced higher," says BofA in a report published just hours after the Federal Reserve's June decision.
Under the new Chairmanship of Kevin Warsh, the Fed firmed its commitment to fight inflation, which prompted the dollar to rise 0.92% against the euro on the day.
At the same time, BofA note the euro "has not materially benefited from the ECB hiking narrative."
"We remain tactically short EURUSD," says BofA.
Separately, BofA says its U.S. clients "appear almost uniformly bearish on Europe."
"They see limited progress on structural reforms, are underwhelmed by the impact of Germany's fiscal stimulus so far, and view Europe as highly exposed to energy disruptions and competition from China," adds the note.
Nevertheless, BofA's economists say they continue to maintain a constructive medium-term EUR bias as European reforms can start to surprise positively.
