Euro defines the dollar's peak – SocGen

According to Kit Juckes, Research Analyst at Societe Generale, the euro isn't as important for the dollar's overall trade-weighted value as it is for, say, the DXY index, but it still matters.

Key Quotes

“Away from political uncertainty, it's clear that the euro area economy is improving. The ECB will be under increasing pressure to remove monetary accommodation after the French elections, and the focus will surely switch back towards the EU/US investment imbalance, which is now the biggest imbalance in the global economy.”

“Whether President Trump increases pressure on FX policy remains to be seen, but we very much doubt that European investors can go on recycling the current account surplus as easily in the coming months as they have in the last year. Any slowdown in the pace of European investors' buying of foreign assets will place upward pressure on the euro and probably guarantee that even in broad trade-weighted terms, the dollar has already peaked.”

“The cycle low in EUR/USD is behind us and the risk of a spike higher is growing.”