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EUR/USD: The rise of EUR/USD is very limited – Societe Generale

This morning’s IFO data confirms what the PMIs told us: expectations are low, says Kit Juckes, FX strategist at Societe Generale.

Euro unlikely to return to 1.08

“Whether the French elections are a driver of increased uncertainty and caution or not is hard to say, but either way, the boost the Euro (EUR) was receiving from positive economic surprises is fading.”

“Meanwhile, a EUR/USD regression against the OAT/Bund yield spread suggests that EUR/USD should be heading towards parity. That it is not doing so may tell us that a market that is already long USD in multiple ways , and has bought American exceptionalism hook, line and sinker, he doesn’t have many more euros to sell.”

“However, just as I might scratch an itch, even though I know it’s futile, I continue to draw these charts because they worry me. At least the upper limit for EUR/USD is very limited and although it has a slight Monday bid today morning, I doubt we will get back to EUR/USD 1.08, let alone higher.”

Source: Fx Street

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