Key Points:
HSBC’s speculative flow tracker is currently the most relevant EUR/USD driver.
2️⃣ Valuation Looks Stretched Relative to Rate Differentials ?
Recent narrowing in spreads hasn’t been reflected in EUR/USD weakness—suggesting overvaluation.
Swift and sizable EU fiscal stimulus is now key to justifying elevated EUR/USD levels.
Conclusion:
HSBC sees EUR/USD as overextended, with its recent gains driven more by speculative positioning than solid macro support. Unless European fiscal stimulus materializes quickly and convincingly, the Euro risks a pullback, especially as rate differentials no longer justify further upside.
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This article was written by Adam Button at www.forexlive.com. Read More Details
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