Societe Generale FX Strategy Research outlines its EUR/USD outlook from a macro and valuation perspective and from a technical front.
On the macro front, SocGen argues that based on the outlook for German real yields and Treasury yields, fair value for the EUR/USD would be around 1.23.
Such a value, according to SocGen, may be too much to expect but still thinks that we’ll see the EUR/USD test the top end of its 1.03-1.17 range at some point in 3Q/4Q.
On the the technical front, SocGen notes that EUR/USD confirmed an inverse head and shoulders pattern earlier this week, and approached an intermittent target at 1.0940/85, the 61.8% retracement from last November’s highs.
"Being able to hold above 1.0670 and, more importantly, the daily channel lower bound at 1.0610 should be pivotal for the EUR/USD uptrend to persist," SocGen adds.
Such a setup, according to SocGen, suggests that the pair looks headed towards 1.1130, and then towards the potential of the pattern at 1.13.
EUR/USD is trading circa 1.09 as of writing.
Source: Societe Generale Cross Asset ResearchOriginal Article
