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5 Aug 2013
Flash: EUR/USD to target 1.3420, where major stops losses found - SocGen
FXstreet.com (Barcelona) - EUR/USD is likely to continue moving higher in the following weeks, with Sebastien Galy, FX Strategist at Societe Generale, suggesting that the tendency is for EUR/USD to trigger stop losses in the 1.3400/20 area before selling it at 1.3460, stop loss 1.3630 and target at 1.28.
Key Quotes
"To understand why EUR/USD rose so much in the past weeks, one must understand the context. The Eurozone has overall a far better balance sheet than the US, while the US is still seeing a deterioration as it imports more than it exports. If yields are insufficient to compensate for that balance sheet pressure, it has a certain tendency to weaken and especially so when the Fed is aggressively easing monetary policy."
"The market will hesitate to push EUR/USD too high lest it be exposed to a short squeeze when the tapering theme comes back. Looking towards the end of August and beginning of September, we have most likely better US data ahead to challenge the stance of the Fed and reintroduce the risk of tapering. The market will start to look beyond the German election where ECB easing becomes more probable, while European institutions tackle more aggressively issues in the periphery."
"We use a short-term model based on a concept of quantile regression to identify the extremes that EUR/USD could reach. The 95% quantile estimate is 1.3420 where major stops losses can be found as it also conveniently enough a key technical level."
Key Quotes
"To understand why EUR/USD rose so much in the past weeks, one must understand the context. The Eurozone has overall a far better balance sheet than the US, while the US is still seeing a deterioration as it imports more than it exports. If yields are insufficient to compensate for that balance sheet pressure, it has a certain tendency to weaken and especially so when the Fed is aggressively easing monetary policy."
"The market will hesitate to push EUR/USD too high lest it be exposed to a short squeeze when the tapering theme comes back. Looking towards the end of August and beginning of September, we have most likely better US data ahead to challenge the stance of the Fed and reintroduce the risk of tapering. The market will start to look beyond the German election where ECB easing becomes more probable, while European institutions tackle more aggressively issues in the periphery."
"We use a short-term model based on a concept of quantile regression to identify the extremes that EUR/USD could reach. The 95% quantile estimate is 1.3420 where major stops losses can be found as it also conveniently enough a key technical level."