EUR: Positioning & Implications For EUR/USD: What's The Trade? - BofAML

Bank of America Merrill Lynch FX Strategy Research assess EUR positioning and discusses its implications for the EUR outlook.
"Institutional investors are not short EUR anymorebut corporates, banks, and most likely the officials are still short EUR compared to pre-crisis benchmarks.
However, we see no strong signs they may be increasing their EUR exposure. This suggests EURUSD could weaken further in the short term, if our central bank calls are right," BofAML argues. 
These conclusions are consistent with BofAML U-shaped EUR projections.
"We feel more confident about our end-year EURUSD forecast of 1.15 following recent weakness. We see EURUSD strengthening back to 1.19 next year. Our end-2017 call has been based on our expectations for a hawkish Fed and a dovish ECB this fall, which is gradually turning out to be the case. US tax reform is a positive USD risk to our projection," BofAML adds.
In line with this view, BofAML maintains a short EUR/USD* position from 1.1891 targeting a move to 1.15 with a stop at 1.21.