Barclays is bearish on EUR/USD, and USD/JPY (target is 100)
We continue to argue that the referendum is at least as big a risk to EU and EMU stability as it is to the UK economy. With GBP option prices already heavily skewed to the downside, EURUSD is a cheaper alternative.. The weekly close below the 1.1020, 52-week average points lower toward initial targets in the 1.0850 area and then the 1.0710 year-to-date lows. We would become more bearish following a break below 1.0710. Our greater targets are toward 1.0460 and then the 1.0215 area t. We expect no changes in the final readings of euro area PMIs (Tuesday). Moreover, we are below consensus in expecting euro area headline HICP inflation to decline to -0.1% in February (consensus: +0.0%). We think that core inflation is likely to soften, easing to +0.9% from +1.0% in January. Risks to both our core and non-core forecasts are tilted to the downside (see February inflation round-up (Part III), 25 February 2016). With medium-term inflation expectations, measured by the 5y5y HICP inflation swaps, trading at new all-time lows last week, we see increasing pressure for the ECB to deliver at its March policy meeting.