EUR/USD: 200d MA Key; EUR/GBP: A Sell; EUR/CHF: Stay Long - Nordea

The market pricing for ECB rates is similar or more aggressive than to pre-December ECB meeting (and similar to our economists’ call). But I got this feeling last week that people will remember and short covering the EUR, which indeed started happening.

Think there is room for a stronger or stable EUR into the ECB meeting, as the technical picture suggests, and a move above 200D moving average (1.1047) would open door for a move toward 1.15 for EURUSD, upper end of the range

But I would still short EUR against GBP, also for the case of a risk positive surprise, aka ECB bazoooooka. I keep the view that the Brexit is a sideshow, and the fact that even with worse UK data the GBP went up last week tells something about the positioning. The BoE is priced to hike for the first time in more than 40 months, similar to ECB now. Big deal! And even with this pricing, the EURGBP fair value is a bit below spot. I won’t even mention the GBPUSD fair value, as it is much higher. Short term, the GBPUSD should extend the rise at least to 1.44-1.45 as momentum turned up.

The EURCHF? Many puzzled why “risk off” in January resulted in higher EURCHF, and went lower with stocks rising since mid-February. Simply, the EUR was more of a safe haven. But the action in March so far brings first sings of normalization – just as the EURUSD went up with stocks, the EURCHF has followed. That should continue as the EUR positioning approaches neutral and recessionary fears recede. Whatever the ECB does this week, the CHF deposit rates are still well below EUR rates, and the SNB will be glad to follow in case of any risk of EURCHF falling below 1.0750 (trend). So keep long EURCHF.

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