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EUR rebound not ruled out - Societe Generale

FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, contemplates the likelihood of a rebound in the EUR in the near term.

Key Quotes

"The foreign exchange market is doing its absolute best to ignore mounting geo-political tension as the Ukraine crisis deepens. Instead, positioning data (for last Tuesday) point to the two dominant themes - a bearish consensus about the outlook for the Euro and a yield-hungry bias more widely."

"EUR non-commercial short on the CFTC are at their highest level since soon after Mr Draghi's ‘whatever it takes' speech two years ago. Clearly, the market is in danger of disappointment if the ECB meeting on Thursday fails to deliver more than dovish rhetoric and promises of action."

"Yet, the failure to stage any kind of month-end bounce on Friday as the Ukraine crisis deepened, leaves a challenging technical picture. And economic, monetary policy dovergence point to a huge amount of potential EUR/USD downside as this interest rate cycle finally gets going. It's set up to be choppy, and the risk of a Thursday bounce is very high, but irrespective of the consensual nature and the precedent from 2012, we want to be short when the NFP data are released on Friday."

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