EUR/USD closing in on 1.10 but 2y2y rate differentials not keeping up – SocGen

Market news

23 January 2023

EUR/USD closing in on 1.10 but 2y2y rate differentials not keeping up – SocGen

Euro moves one step closer to 1.10. Can EUR/USD have a go at 1.10? Economists at Société Générale discuss the pair’s outlook

Hedge funds are not getting carried away

“Interestingly, 2y2y forwards (3 bps wider in favour of USD this morning) are not keeping track with the currency. Hedge funds are not getting carried away either. Long euro positions were fractionally lower last week.”

“Euro PMIs tomorrow and the German IFO on Wednesday are forecast to reinforce cautious optimism that the economy will dodge recession this winter.”

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