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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that the Euro has reversed late December’s spike, supporting the notion that this was indeed a product of lack of ">Euro liquidity.

Key Quotes

“I’ve plotted EUR/USD against my silly baby-model and you can see that the same thing happened last year, with divergence in December corrected in January. EUR/USD fell from 1.32 to 1.30 in the first few days of 2013, but it rallied sharply thereafter. (Looking at) peripheral spreads and relative Euro/US rates, last January saw a sharp move higher in Euro-denominated rates as economic optimism took hold, and Spanish bonds also performed strongly.”

“So far this year, relative rates aren’t doing much, but we’ve see the Spanish/German spread tighten further, with both 10 and 3yr spreads assaulting 2011 lows. The correction from the December technical move is pretty much over, and the underlying drivers suggest that if anything, we may now head higher again, until relative rate moves dominate, rather than the lack of risk aversion in Europe. Euro bears should not be tempted out of hibernation- their time will come, but not yet.”
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