Societe Generale FX Strategy Research notes that the EUR rally is being slowed down by the build-up of big long positions, the gap between how far the currency has gone and the move in relative yields, and the rhetoric of the ECB President.
“All of which argue for buying a corrective dip which hasn’t really happened yet. The pull-backs so far have been modest, testimony to the underlying strength of the upward trend.
EUR/JPY has disappointed of late, after rallying sharply from mid-April to mid-May; EUR/JPY remains the most attractive Euro long other than EUR/GBP,” SocGen advises.
EUR/JPY is trading circa 124.42, and EUR/GBP is trading circa 0.8733 as of writing.
Source: Societe Generale Cross Asset Research
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