EUR/USD exposed to two clear downside risks in near-term – Societe Generale

Dhwani Mehta FXStreet

The analysts at Societe Generale offer their outlook on the EUR/USD pair, in the wake of the recent weakness in the pound and the Chinese Yuan.

Key Quotes:

“Over 6-12 month horizon, given positions and valuation, it's easier to see EUR/USD at 1.20 than 1.05.

But, in the one to the three-month horizon: There are two clear downside risks.

A weaker Yuan … A near-term break of USD/CNY 7 may be unlikely, but it would drag EUR/USD through the year's lows and could trigger stops.

And a weaker pound … If sterling takes another significant knock that too will hurt the Euro.

It’s difficult to gauge the probability of the Chinese authorities allowing USD/CNY to break higher, or of another sterling confidence crisis.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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