EUR/USD: Dollar correction faces resistance – Societe Generale
Societe Generale’s Kit Juckes notes a softer Dollar as Oil and bond yields edge lower and equities firm, with month-end flows likely in play.
Societe Generale's Kit Juckes observes a softer Dollar due to lower oil prices, falling bond yields, and rising equities, with month-end flows potentially influencing the market. The expert points out favorable conditions for a Dollar correction but cautions that if EUR/USD cannot reach at least 1.14, it would be viewed as an additional selling opportunity for the Euro.
This would reinforce negative sentiment stemming from poorer European data. Relative interest-rate differentials continue to work in the Dollar's favor, while markets still expect three ECB rate hikes before the middle of next year. The article questions whether there is sufficient growth in the Eurozone to justify such rate hikes, implying an overreaction to a temporary inflation shock, which could persist due to the ongoing energy crisis.
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