Societie Generale Research flags a scope fro EUR/USD to break higher, while maintains shorts in EUR/JPY and GBP/JPY.
"A slightly stronger fix in Beijing was interpreted a signal that the authorities are, at least, reluctant to see their currency weaken too fast. If that triggers yuan short-covering, that could be a catalyst, in thin market conditions, for the euro to break higher into the month-end. So far, EUR/USD has twice failed to close above its 200-day average (1.1012) and since the March madness moves, has tested but failed to break it's 2-year downtrend, the top of which is at 1.11 now," SocGen notes.
"We've short EUR/JPY and GBP/JPY, with stops at 120 and 136 and we'll leave those to do their work. Sterling's by far the worst of the major currencies this month and while that opens the way for month-end short-covering, Andrew Bailey reasserts the MPC's readiness to act further in the Guardian. He's keeping the negative rate debate alive...Sterling's only support is the size of the short positions and thin month-end markets magnify that support, but that doesn't change the fundamentals," SocGen adds.