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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - On its latest research note sent to clients, Sebastien Galy, Senior Currency Strategist at Societe Generale, gives his take on why the Euro is performing so well, yet Galy thinks is time to sell the currency.

Key Quotes

"The Euro is so strong because peripheral spreads are tightening and since the start of May, Euro rates have risen relative to US ones. That may seem utterly daft and is certainly not what we forecast, but the FX market doesn't care that SG economists expect Fed policy rates to rise by 150bp relative to ECB ones by end-2016."

"Of course, if that happens, my little model will expect Eur/Usd to be closer to parity (unless factor weights change). Where will we go? Well, lower by 2016. But as I have written before, above 1.35, EUR/USD is in my strategic sell-zone."

"So, my first EUR/USD trade recommendation in ages. Sell at 1.3585, with a stop at 1.3720, 1% above here and above the year's high. If we break that, stops will go and I'll re-think closer to 1.40."
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