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Mar 24 - 10:55 AM

EUR/USD: Still A Sell Above 1.11 Targeting 1.08 - Credit Suisse

By eFXdata  —  Mar 24 - 09:30 AM

Credit Suisse maintains a sell-on-rallies bias on EUR/USD.

"What about EURUSD? We had been targeting 1.0800, and we see no reason yet to change this view given the direction of US rates. Even if euro area rates are also rising in sympathy with US ones, the bottom line remains that rates divergence in favour of USD is likely, as has been the case for much of the past year. Looking at real interest provides a stark assessment of the underlying forces too, especially as nowadays euro area inflation is actually high too. In fact the only real prop for EUR in our view remains the fact that implied volatility is still somewhat elevated due to Ukraine risks, and the skew in EURUSD is still decently bid for EUR puts," CS notes. 

"We have seen this positioning argument more as a reason for why EURUSD won’t fall quickly than as an active reason to be long. We continue therefore to advocate selling above 1.1100, which has been our view since 8 Mar," CS adds. 

Source:
Credit Suisse Research/Market Commentary

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