Investing.com – The euro is currently enjoying a rise and looks set to continue, according to Bank of America Securities.

BoA analysts in their August 26 note said that the US dollar sell-off was undoubtedly the most crucial point in the currency market in August, while investors may have underestimated the overall rise in the euro.

However, the euro’s nominal effective exchange rate (NEER) rose by 1.1% on a trade-weighted basis this month, placing it in the 80th percentile compared with the past 20 years, the bank added.

The bank said the euro’s strength is not solely due to a bilateral breakout, as among the G10 currencies other than the USD, the euro could see the strongest bull run in the near term.

“Over the past month, the 1-minute deviation (risk reversal over current volatility) has increased by 12% for EUR/USD call options, which is by far the highest among all USD/G10 pairs,” BoA said.

With this in mind and given the euro’s dynamics, the bank recommends a bullish rating for the currency pair this week.

“EUR/SEK stands out as an attractive candidate for us as the pair has returned -3% over the past month, ranking in the 3rd percentile over the past decade,” the bank said. “EUR/SEK spot movement has been counter to the bullish EUR options flow and is offset from the 2-year EU-SK interest rate differential.”

BoA added that the SEK rally has been long-term and in our view was mainly due to the unwinding of tiny SEK positions and speculators viewing SEK as a “high beta” indicator for EUR amid the risk rebound this month.

“As EUR/SEK spot has now fallen to trendline support and the 200-day SMA, this level has become attractive enough to tactically dampen the EUR/SEK monthly move.”

At 06:15 ET (10:15 GMT), EUR/SEK was down 0.1% to 11.3905.