8 Dec 2014
EUR/USD set to break below 1.20 but won't collapse - Societe Generale
FXStreet (Bali) - EUR/USD is set to break below 1.20, but won’t collapse, notes Societe Generale.
Key Quotes
"EUR/USD is on its way to below 1.20 for the first time in a decade. Transatlantic monetary policy divergence is making its presence felt, with negative ECB deposit rates particularly potent when it comes to driving money out of the euro. A weaker currency will also be the main impact of ECB sovereign QE in Q1."
"The trend is likely to be turbulent, but we do not recommend going long volatility because risk reversals aren’t performing, and uncertain timing suggests structures benefiting from the passage of time (selling volatility). The soaring euro area basic balance surplus should also limit euro downside."
Key Quotes
"EUR/USD is on its way to below 1.20 for the first time in a decade. Transatlantic monetary policy divergence is making its presence felt, with negative ECB deposit rates particularly potent when it comes to driving money out of the euro. A weaker currency will also be the main impact of ECB sovereign QE in Q1."
"The trend is likely to be turbulent, but we do not recommend going long volatility because risk reversals aren’t performing, and uncertain timing suggests structures benefiting from the passage of time (selling volatility). The soaring euro area basic balance surplus should also limit euro downside."