Forex Flash: EUR/USD, selling topside risk around 1.40-1.42 preferable - Societe Generale

According to Sebastien Galy, currency strategist at Societe Generale, "selling topside risk around 1.40-1.20 range in EURUSD is rational and most probably deep downside risk as the ECB is managing credit risk to help policy transmission and willing to pay the price of a somewhat expensive currency."

Sebastien warns that eventually, "EURUSD will head south in H2 but that will happen when US yields break far more cleanly higher on the back of a solid US recovery."

Mr. Galy adds: "For the ECB the game is therefore one of patience. The move lower in GBPUSD ahead of Carney's speech is a preview of what will happen to the EUR, the main difference is the ultra low UK yields and the suffering from weak EZ demand."