EUR/USD: Resilience near pre-war highs – Societe Generale

Societe Generale strategists note EUR/USD has squeezed through 1.1750 and is approaching its pre-conflict level of 1.18, with support at 1.1673 and resistance at 1.1830. They highlight impressive Euro resilience despite Brent remaining 35% above late-February levels and see ECB communication, particularly from President Lagarde at the IMF, as key for near-term direction.

Euro holds firm as conflict rages

"Euro squeezes through 1.1750, approaches pre-conflict level of 1.18. Support 1.1673, resistance 1.1830."

"The resilience of EUR/USD is impressive it must be said as the gap narrows to pre-conflict levels near 1.18, knowing that Brent still trades 35% above the level of 26 February."

"The uncertainty over more permanent spillover of energy prices to non-energy goods and second round effects (wages), and the trade-off for growth (Aussie biz confidence plummets on new orders) leaves central banks with a tricky balancing act but the default position is still hawkish."

"This also applies to the ECB. Speeches by ECB council members incl President Lagarde at her old stomping ground of the IMF will today garner close attention for any policy remarks that signal a preparedness to raise rates sooner rather than later."

"Tactics in EUR/USD turned but 1-week RR (including the ceasefire expiry next week) have flatlined around -0.55."

"Halfway into the fragile two-week ceasefire and it’s unclear if the strategy to chase higher levels in spot USD/G10 and trimming short duration in G10 government debt is worth considering or is naïve in the knowledge that without compromise on red lines the war of attrition will continue between Washington and Tehran, maintaining the geopolitical premium in energy prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)