The euro is under pressure but it managed to stabilize around 1.18. What ´s next? Maybe it can go lower.
Societe Generale Cross Asset Strategy Research discusses EUR/USD outlook and notes that the break of 1.1825 opens the door towards December’s lows at 1.1720, which was the springboard for the move to 1.25.
Meanwhile, ScoGen thinks that BTP/Bund spread should stay under the radar of EUR investors in the near-term.
“The BTP/Bund is edging wider and while 136bp is far from dramatic, the news flow ranges from the plausibly worrying prospect of easier fiscal policy to less plausible suggestions like debt forgiveness and an agreement to take turns at being PM.
So far the bond market has been resilient because the ECB has its back, but Mr Draghi’s ‘whatever it takes’ pledge probably didn’t include indulging too many of the whims of a populist government,” SocGen adds.
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