Goldman Sachs on $EURUSD

$EURUSD – Just stuck in the range. Despite the widening in Eurozone periphery/core spreads the range trading seems to make sense when you take into account the still strong correlations with core Eurozone rates highlight in last week’s The Charts That Matter Next Week. Although pressure on the periphery has again increased the equally weighted EUR/USD 2-, 5- and 10-year swap spread basket remains within its recent range and above pivot support, EURUSD is currently essentially in line with what it implies as “fair value”. To generate a sustained down (or up) move in EURUSD from here it really looks as those a material break in the EUR/USD spreads is needed. Bias as previously discussed is that it will eventually more likely be a downside break than an upside one, i.e. driven by a fall in core-Eurozone yields (possibly as a result of the worsening global picture and still negative technical setup in the peripheral markets).