eFXdata reports that Credit Agricole CIB Research discusses the latest reading from its long-term fair-value models and points that the pair is still very undervalued around current levels.

"The G10 VALFeX long-term fair value for EUR/USD hit 1.24 at the end of 2019 (from 1.23 in Q319) - its highest level since 2017. This reflected wider real EUR-USD rate and yield spreads as well as an improvement of the Eurozone's external imbalances relative to the US. In turn, this makes the EUR the second most undervalued G10 currency at present, after the NOK," CACIB notes.

"It is also worth highlighting that the EUR is the most undervalued G10 currency when using purchasing power parity (PPP) to determine the currencies' long-term fair value. Indeed, according to PPP, EUR/USD should have been at 1.4000 at the end of 2019 - a new record high," CACIB adds.