EUR: A 'EUR-Phoria' Rally; What's Next? – TD

TD Research notes that the EUR looks set to close out mid-year as the top performing currency in G10 on the back of deep undervaluation and the prospects for policy normalization later in the year which have provided a tail wind for the single currency.

The risks to the EUR-phoria theme is that the foundation that built the EUR rally looks flimsy over the coming months. Indeed, besides the reduction of political risks, the EUR rally coincided with the surge in EZ data surprises. This led to a steady rise in growth upgrades of the EZ economy in 2017 based on the BBG consensus (1.3% in Jan vs. 1.8% now),” TD adds. 

We like the structural EUR story but still look for a push back toward 1.11 and like EURJPY downside over the coming days,” TD argues.

Source: TD Securities Research

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