Home EUR/USD: S/T Valuation Model Still Points To Further Correction
Daily Look

EUR/USD: S/T Valuation Model Still Points To Further Correction

EUR/USD suffered after an ECB member showed caution regarding a new policy move. Is the correction over? Not so fast.

Here is their view, courtesy of eFXnews:

BTMU FX Strategy Research argues that the  latest EUR/USD rally is partly a reaction to an extreme dollar over-valuation  fuelled more by extreme monetary accommodation beyond the US than by monetary tightening in the US.

“Hence, the prospect of that ending is resulting in out-sized FX moves like we have had in recent weeks,” BTMU adds.

Our Short-term Valuation model clearly indicates that EUR/USD has overshot and point  to the risk of a short-term correction  after the recent sell-off fuelled by increased speculation of a shift in monetary stance ahead.

The EUR/USD overshoot relative to our short-term valuation model illustrates in part the fact that while rates have moved higher in the euro-zone, the same has happened in the US,” BTMU notes.

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.