12 May 2015
Stay long EUR/USD for a test of 1.15 – JP Morgan
FXStreet (Edinburgh) - Analyst at JP Morgan Paul Meggyesi recommends keeping long positions in EUR/USD for a potential test of 1.15.
Key Quotes
“QE-mania affected the euro as much as it did Bunds as reflected in unprecedented deviations from cyclical valuation models and a 97% correlation between Bund yields and EUR/USD over the past year”.
“Markets can dislocate from the business cycle for only so long and while we expect neither Bunds nor the euro to completely close their respective valuation gaps, the continued outperformance of the Euro area economy relative to the US offers further modest upside for EUR/USD (1.15?)”.
Key Quotes
“QE-mania affected the euro as much as it did Bunds as reflected in unprecedented deviations from cyclical valuation models and a 97% correlation between Bund yields and EUR/USD over the past year”.
“Markets can dislocate from the business cycle for only so long and while we expect neither Bunds nor the euro to completely close their respective valuation gaps, the continued outperformance of the Euro area economy relative to the US offers further modest upside for EUR/USD (1.15?)”.