Barclays Capital FX Strategy Research sees the recent sell-off in European rates as nearly done and looks to fade the rates-induced EUR/USD rally at current levels.
In particular, Barclays argues that ehile there may still be some room for the European sell-off to continue, as positioning still seems to be the wrong way around, risky assets and spread products are holding up well, thereby limiting flight-to-safety moves for now.
“A stabilisation in European rates will likely imply a toppish pattern for EURUSD, and we see scope for a gradual retracement towards our H2 17 forecast of 1.10,” Barclays adds.
Source: Barclays Research
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