EUR: 2 Challenges N-Term & A Period Of Choppy Trading: What's The Trade? – SocGen

Societe Generale FX Strategy Research’s first reaction following yesterday’s victory of  Emmanuel Macron in the French Presidential election was that EUR would likely see a wave of profit-taking on long positions.

Today, SocGen follows on the EUR reaction noticing that the single currency faces two short-term challenges.

The first is that the FX market has moved a good way further in recent days than the bond market, with the Treasury/Yield spread not very different from where it was when EUR/USSD was under 1.08. Bunds need to catch up with the currency. The second hurdle is positioning. CFTC data show the smallest speculative Euro short in 3 years. That’s still a short position, of course, so much more of a short-term hurdle than a reason for a deep correction to lighten positions.

As such, SocGen expects a period of EUR choppy trading for now, but still expects EUR/USD to move higher in due course.

Strategy-wise, SocGen still likes long EUR/JPY positions to EUR/USD and EUR/GBP at this stage.

EUR/JPY is trading circa 123.80 as of writing. 

Source: Societe Generale Cross Asset Research

The article is published by one of the foremost sources of Forex trading information. Link to the original article above.

from eFXNews

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