By eFXdata — Nov 18 - 09:28 AM
Societe Genearle Research discusses the USD outlook over the coming weeks.
"How far the dollar rallies from here may be less a function of how the market gets of the dollar in general, than a question of whether the market now builds a big euro short will mostly be a function of how short the market now gets of the euro. Disappointing car sales this morning aren’t a huge surprise but they are still weak. The ECB’s commitment to keeping policy accommodative isn’t new but 1y1y rates have dropped back 20bp since the start of November. And the Covid-19 situation has the capacity to hurt sentiment even if restrictions to movement are small compared to what we’ve seen before," SocGen notes.
"Previous post-GFC occasions when EUR/USD traded below 1.10 (beginning and end of 2015, the end of 2016 and early 2020) were accompanied by a big euro short position in the COT report. If the question is ‘Will the market now get very short euros’ then think the answer is that it will unless data improve dramatically," SocGen adds.
Société Générale Research/Market Commentary