Forex Flash: EUR/USD on track to 1.40 before 2,000 pips drop by year-end - Societe Generale

FXstreet.com (Barcelona) - With relative interest rates and peripheral bond spreads all moving sharply in the Euro's favour in January, this effect "may continue to send the EURUSD higher, to 1.40 or so" says Kit Juckes, Head of FX at Societe Generale.

However, Mr. Juckes adds: "That doesn't alter a view that the Euro will weaken to USD1.20 by the end of 2013 as EU/US economic divergence increases. A strong Euro may reflect trends in the currency's fundamental drivers, but it will increase economic divergence within Europe and force a horribly painful adjustment on less competitive economies."