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Forex pairs in this Article » EUR/USD (Barcelona) - While talk continue about the euro strength being driven by previous positioning in long emerging market assets versus short euro trades, in view of John Hardy, Head of FX Strategy at Saxo Bank, "it could also be that the market wisdom is that US treasuries should be avoided due to the tapering threat, and that European bonds are a safer haven for capital flight from emerging markets since bond prices will remain better supported for now."

According to Hardy, a stronger Euro vs the USD is not expected to continue much longer, saying "If risky assets continue to sell off sharply, US treasuries will eventually find a strong bid on safe-haven seeking and this would boost the US dollar." Even if not, Hardy thinks "the US would still look like the better currency due to higher yields once some degree of equilibrium has been found during this season of fearing the taper."
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