EUR/USD Started To Look Stretched: Where To Target?
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EUR/USD Started To Look Stretched: Where To Target? - BNPP
BNPP took profit on its long EUR/USD yesterday at 1.16 target locking in a profit of 2.7% advising not to chase the pair higher from here.
We believe USD positioning is getting increasingly short (-19 on our scale of -50 to +50) and more importantly, US front-end yields have finally adjusted to levels where risks are more skewed to the upside. US 2-year yields have fallen from 110 bps at the start of 2016 to 75 bps now. These levels are now consistent with our Rates Strategists’ year end targets.
Our STEER model now suggests EURUSD is rich to key drivers with the model signals fair value at 1.1346 (see chart). STEER has proven to be a reliable indicator of short-term EURUSD movements this year.
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