In a note to clients last week, JP Morgan saw a good chance of EUR/USD reaching 1.25 this year and north of 1.3000 next year nL1N2F80AA, and said the recent sell-off has done little to alter its view; a setback was anticipated as part of the process to further gains.
The bank does recognise the record-long IMM positioning poses some problems, especially in the current illiquid holiday markets, but JPM remains firmly bullish and advocate a core long, while leaving room to add on dips to 1.1700 initially, and more so at 1.1650.
Tuesday's better-than-expected German ZEW data has helped the recovery from early 1.1722 lows to 1.1809, but further gains are proving hard fought.
The FX options market has significantly reduced premiums for implied volatility and EUR calls, from last week's new highs -- consistent with profit- taking and a view that the recent EUR/USD rally is over for now, and that a period of consolidation is expected nL1N2FD06K
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