Societe Generale Research discusses its latest tactical view on EUR/USD and AUD/USD.
"The dollar is expensive, supported by stronger growth and 2-year rates that are 70bp higher than the next highest in the G7 economies . The euro is cheap, dragged down by weak growth, political uncertainty and 2-year rates that are even lower than Japan's. Furthermore the market's long dollars and short euros.
The risk then, is that having broken through the bottom of the recent EUR/USD range, all we do is add another coat of paint to the bottom of it, and settle into a marginally lower range, that is just as claustrophobic as the previous one. Alternatively, we may be entering a buying area If that's the case, the low for this EUR/USD cycle may not be very far from here. Q1 GDP data are due on March 30,"SocGen notes.
"AUD/USD has fallen right back to the bottom of its range, but if AUD/USD 0.70 holds through tomorrow, it's worth buying," SocGen adds.