Societe Generale notes that the consensus view on EUR/USD in 2021 doesn't reflect reflect this year's scale of the FX regime change. SocGen targets the pair at 1.27 by end of 2021.
There isn't a big (very) long-term trend in G10 currencies but rather, a series of regime shifts. The consensus is at its best when the change of regime is obvious, and at its worst when it fails to understand that the regime has changed, or the move has simply gone too far," SocGen notes.
"In 2018 and 2019, and at the start of 2020, the consensus looked for EUR/USD to rise back towards the pre-2015 range. There is a bias to be bullish euros. Now the consensus looks for EUR/USD to trundle slowly towards 1.23. That's just more of the same, and fails to reflect the scale of the FX regime change that has occurred this year as a result of the pandemic and hasn't even begun to think about whether vaccines trigger another structural shift,"SocGen adds.