EUR/USD: where next after breaking above 1.20?

EUR/USD made a move in the last days of 2017 and closed the year above 1.20. This was not only an end-of-year move but a clear move, as it extended into 2018. What’s next? Can it hit 1.25? Here are two opinions:

Here is their view, courtesy of eFXnews:

EUR/USD: En-Route To 1.25 By Mid-Year – SocGen

Societe Generale Cross Asset Strategy Research starts the new year with a bullish bias on EUR/USD targeting a move towards 1.25 by mid-year.

“2018 has started with Asian equities rallying, bond yields low and steady, oil and metals prices well supported and the dollar soggy. Economic data is strong, risk is ‘on’, investors are looking for yield, and the year won’t start until after Friday’s December US employment report.

EUR/USD spiked as soon as cross-currency basis strains eased. We expect EUR/USD to reach 1.25 by mid-year but we need the recent helpful move in relative real yields to persist,” SocGen argues.

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EUR/USD: Staying Long But Caution In Chasing Rally; What’s The Trade? – Credit Agricole

Credit Agricole CIB FX Strategy Research discusses the EUR outlook and keeps expressing its bullish bias on the single currency via holding a long EUR/USD* from 1.1770 targeting 1.22 and a long EUR/CHF* from 1.1320 targeting 1.18.

EUR has been one of the big beneficiaries considerably from the USD sell-off in recent weeks. We suspect that year-end earnings repatriation flows may have played an important role especially in the case of EUR. That said, some fundamental drivers may have had a role to play as well.

All that said, the EUR rally in recent weeks may suggest that some of these positives are already priced in and thus leave the bar for any positive surprises relatively high. We advise caution on chasing the rally in EUR/USD from current levels in the very near term. At the same time, longs in EUR/CHF still look attractive at present,” CACIB argues.

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