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6 Feb 2013
Forex Flash: EUR/USD, selling topside risk around 1.40-1.42 preferable - Societe Generale
According to Sebastien Galy, currency strategist at Societe Generale, "selling topside risk around 1.40-1.20 range in EURUSD is rational and most probably deep downside risk as the ECB is managing credit risk to help policy transmission and willing to pay the price of a somewhat expensive currency."
Sebastien warns that eventually, "EURUSD will head south in H2 but that will happen when US yields break far more cleanly higher on the back of a solid US recovery."
Mr. Galy adds: "For the ECB the game is therefore one of patience. The move lower in GBPUSD ahead of Carney's speech is a preview of what will happen to the EUR, the main difference is the ultra low UK yields and the suffering from weak EZ demand."
Sebastien warns that eventually, "EURUSD will head south in H2 but that will happen when US yields break far more cleanly higher on the back of a solid US recovery."
Mr. Galy adds: "For the ECB the game is therefore one of patience. The move lower in GBPUSD ahead of Carney's speech is a preview of what will happen to the EUR, the main difference is the ultra low UK yields and the suffering from weak EZ demand."