EUR/USD continues its retracement from 1.10. The pair is expected to remain under downside pressure. Nonetheless, a rebound around 1.0450 is on the cards, economists at Société Générale report.  

Mont-end could elicit further selling

“Mont-end could elicit further selling today/tomorrow.”

“The problem confronting the ECB, like that facing the Fed, is that it may have to prolong the tightening cycle and by doing so cause a harder economic landing. This could bring down equities and credit markets. European securities have outperformed the US since the start of the year and a reconvergence would test the premise for a stronger EUR/USD.”

“The pair has basically dropped five big figures from a high of 1.1033 over the past month on 60 bps of additional implied Fed tightening. If markets were to, say, reprice Fed funds to 6%, it would be unwise to rule out further selling. We should, however, see a rebound first, if not before, then around 1.0450.”