EUR/USD is marking time – SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the EUR/USD is marking time this morning after moving higher still yesterday on comments by Angela Merkel that it is ‘too weak’.

Key Quotes

“If by too weak she means cheap relative to PPP valuations, or to FEERs, then this is of course, true. It’s weak because the ECB has engineered weakness with QE and negative rates. And because that ECB policy is beginning to look very long in the tooth, the Euro is likely to be higher on a 3, 6 or 12-month basis. In the very short-term, as observed yesterday, it has moved some way ahead of relative bond yields and positioning data suggests the market is long and the consensus is bullish. That makes for a choppier path upwards from here, but it doesn’t alter the prospect of further gains in the weeks and months ahead.”