EUR/USD dipped yesterday to the lowest levels since July, but never went too far. What’s next? Here are the views from BTMU and SocGen.
Here is their view, courtesy of eFXnews:
EUR/USD: Consolidation Into Year End Before Resumes Strength: Where To Target? – BTMU
BTMU FX Strategy Research discusses EUR/USD outlook into year-end expecting that following a period of consolidation in Q4, there is a scope for the EUR to advance further in 2018.
“The euro has suffered from years of crisis and existential risks that we believe are unlikely to resurface again any time soon.
Investor demand for eurozone equities is currently at a record and this investor shift in sentiment has more to run next year which will allow for further euro gains ahead,” BTMU adds.
In line with this view, BTMU targets EUR/USD at 1.18 by end of year and at 1.20 by Q1 2018.
EUR/USD: Bullish Signals From 3 Key Sentiment Indicators – SocGen
Societe Generale Cross Asset Strategy Research notes 3 key sentiment indicators pointing to a market sentiment which remains robustly bullish on the EUR.
1- Positioning still long EUR: “The latest CFTC data indicate some retreat in the net long euro position, but the overall level remains highly elevated,” SocGen notes.
2- Positive risk reversals: “Similarly in EUR/USD risk reversals, there has been a pullback from the early October highs but the risk reversals have clung onto positive territory, indicating a premium in the price of calls compared to puts of the same delta,” SocGen adds.
3- Consensus for year-end target above forward: “Moreover, the latest consensus FX forecast has EUR/USD 1.22 by end-2018, which is above both the current spot and the forward rate,” SocGen notes.
