The euro (USD) remains a key receiver of US dollar outputs (USD) and is currently quoted around 1,125 after important night oscillations that saw it trade as high as 1,138. Together with their appeal as a liquid reserve currency, the markets are probably still optimistic that the EU is not willing to climb the commercial war with the US for now, says the FX analyst of FX of INGFrancesco Pesole.
1.15 is a reasonable short -term objective for the EUR/USD
“It is important to note that the massive rally of the Eur/USD is almost entire EUR/USD by trading not far from 1.05. ”
“By adding the relative effect of the actions and the freshly invested correlations with the shares, we obtain a fair value in the short term of around 1.09, according to our estimates. We must take that with a grain of salt, since the extreme volatility of the market and the unconventional turns in the correlations reduce the explanatory power of such models.”
“That said, the EUR/USD is certainly overvalued at these levels, about 4% in our calculations. But we noticed that relatively similar conditions in the summer of 2020 led to a 6% overvaluation peak in the EUR/USD. In current terms, that would be approximately a movement towards 1.15. Given the high volatility and poor liquidity conditions of the currency market, 1.15 is a reasonable short -term objective for the EUR/USD unless decisions in Washington rebuild some type of confidence in the dollar. “
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
