Danske Bank FX Strategy Research notes that EUR/USD has entered into an overbought territory after breaking above 1.15 .
According to IMM data, suggesting the EUR/USD rally could lose momentum near term.We note that EUR/USD is now significantly overbought according to our short-term financial model, trading 1.3 standard deviations above the model’s short-term fair value estimate of 1.1287.
Strategy-wise, Danske maintains the view that any dips in EUR/USD are likely to prove short-lived and still like to buy the cross on dips.
"Longer term, we still see the cross higher, targeting 1.18 in 12M. In our view, EUR/USD has the potential to rise towards the 1.20s as Fed-ECB divergence fades.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
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