EUR/USD: Room For Further Downside; GBP/USD: ‘It’s Untradeable’ – SocGen

Apr 02,2019 14:31   Source:Forex Crunch

EUR/USD is trading around 1.1200, struggling. What’s next? And for the pound, some seem to have given up.

Here is their view, courtesy of eFXdata:

Societe Generale Research summarizes its views on GBP/USD and EUR/USD around current levels.

“One place where spring is yet to turn up, is the Eurozone, however. The Eurozone April manufacturing PMI now looks like an outlier in its inability to bounce at all. The Treasury/Bund spread is widening again, and while the euro failed to get any real benefit from narrower yield differentials at the start of this year, widening ones will anchor it. Peripheral yield spreads are a little wider too, and that won’t help. So, after trading in its smallest quarterly range ever, EUR/USD is set to go on testing the downside, supported only by the scale of shorts in the market. CFCT suggests these are back to 2106 levels but while that may prove helpful to the euro when good news turns up. It won’t while the good news is so clearly absent,” SocGen notes.

“We will see more Indicative Votes today, and with a ‘no deal’ Brexit and a lengthy delay in the process the only alternatives left on the table, there’s plenty to be nervous about. But the FX market has lost interest. CFTC data suggest the net short position in the market has fallen further, while open interest has collapsed. Consensus view – it’s untradeable,” SocGen adds.

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