Forex Flash: EUR/USD key to EUR cross direction – Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale believes that investors should look to re-buy EURJPY and EURGBP if EURUSD tests and holds 1.3400.
He feels that after a huge risk rally at the start of 2013, markets are in a correction, induced by a weaker US equities and Spanish political uncertainty. Juckes notes that the corrections in European equity and bond markets have reversed a couple of months' worth of price gains, whereas the EURUSD move is far smaller - reversing only a few days of gains. That tells him something about positioning and sentiment which in terms of the Euro is not yet overly bullish.
He writes, "Without the bullish backdrop needed for a large-scale capitulation, we are more likely in a mild correction than at a turning point. On the basis of the last couple of meaningful corrections, the level to buy EURGBP and EURJPY is when EURUSD is around 1.34, though a bounce is unlikely until after the ECB meeting on Thursday."
He feels that after a huge risk rally at the start of 2013, markets are in a correction, induced by a weaker US equities and Spanish political uncertainty. Juckes notes that the corrections in European equity and bond markets have reversed a couple of months' worth of price gains, whereas the EURUSD move is far smaller - reversing only a few days of gains. That tells him something about positioning and sentiment which in terms of the Euro is not yet overly bullish.
He writes, "Without the bullish backdrop needed for a large-scale capitulation, we are more likely in a mild correction than at a turning point. On the basis of the last couple of meaningful corrections, the level to buy EURGBP and EURJPY is when EURUSD is around 1.34, though a bounce is unlikely until after the ECB meeting on Thursday."
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