FXstreet.com (Barcelona) - With relative interest rates and peripheral bond spreads all moving sharply in the Euro's favour in January, this effect "may continue to send the EUR/USD higher, to 1.40 or so" says Kit Juckes, Head of FX at Societe Generale.
However, Mr. Juckes adds: "That doesn't alter a view that the Euro will weaken to USD1.20 by the end of 2013 as EU/US economic divergence increases. A strong Euro may reflect trends in the currency's fundamental drivers, but it will increase economic divergence within Europe and force a horribly painful adjustment on less competitive economies."
However, Mr. Juckes adds: "That doesn't alter a view that the Euro will weaken to USD1.20 by the end of 2013 as EU/US economic divergence increases. A strong Euro may reflect trends in the currency's fundamental drivers, but it will increase economic divergence within Europe and force a horribly painful adjustment on less competitive economies."
