Is EUR/USD set up for a short-covering rally ahead of payrolls? Kit Juckes, Chief Global FX Strategist at Société Générale, thinks the EUR/USD bearish consensus is excessive in the short-term.

Energy threat to Europe is not going away

“What if we see euro shorts cover ahead of payrolls data? Consensus expects a 300K increase, but any talk of a downside risk would shake things up.”

“Relative rates suggest EUR/USD would be around 1.08 if we weren’t so focused on energy market risks. I don’t, to be clear, think that the energy threat to Europe is going away, or that EUR/USD has seen its cyclical low, but I do think the EUR/USD bearish consensus is excessive in the short-term.”