TD Research discusses EUR/USD and EUR/CHF tactical outlook and prefers to stay sidelined EUR/USD in spot, and likes long exposure in EUR/CHF.
"The ECB delivered on a dovish mark to market on the state of the economy. It acknowledged that growth risks, "have moved to the downside". A deeper dive on the ECB here but, for the EUR, the critical piece is how much of this is already priced in? Our tracking of G10 growth expectations show that EUR sits at the bottom of this metric. We incorporate this data into our HFFV, which still plugs EUR north of 1.14," TD notes.
"The EUR also looks a bit cheap to it, favoring upside in EURCHF. These are not reasons to buy EURUSD, though we still think that the 1.13-1.16 range should hold given considerations around positioning and a steady string of negative news flow that is baked into the price," TD argues.