TD Research notes that its high-frequency fair-value models put EUR/USD around 1.12, and likes buying EUR/GBP on dips
"The USD's on a tear the past few days. The DXY marked its highest level in roughly two years, reflecting a notable drop in the EUR. An essential question is whether this move reflects genuine USD strength, G9 weakness or something more technical. For one thing, we don't think the narrative has changed all that much. One critical fundamental point relies on the emerging growth rotation, which has been painfully slow to emerge," TD notes.
"GBP is the one currency that hints of the positive transition where good data dovetails with a positive read on growth expectations. Brexit throws a monkey wrench into this type of framework but EUR falls close behind on these measures. Indeed, it shows a decent data surprise pulse but it has yet to generate a buy signal on the growth front. While positioning remains short, we note that EURUSD HFFV sits around 1.12. Still, we think there is enough evidence here that EURGBP looks attractive on dips, "TD adds.