A great point from SocGen
Every forex trade is a bet on two things. You can be right about one half of the trade but if you're dead wrong about the other half, the best you can do is breakeven.
That said, the equation isn't always as clear. At times, a currency can become a placeholder. The yen has done this from time to time with rates stuck on zero, nothing happening in the economy and nothing happening at the Bank of Japan.
Other times, the market is entirely focused on one part of the equation because it's so much more volatile and compelling.
SocGen's Kit Juckes thinks this is one of those times for the euro.
"The outlook for the euro has as much, and probably a lot more, to do with European issues (political, economic and policy) as it has to do with what's going on the US," he writes today. " Perhaps it's not surprising then, that with major fiscal policy easing not under consideration (despite being the obvious cure for the current economic weakness,) with Brexit uncertainty continuing and with the ECB hamstrung, the euro can't get much joy from lower US bond yields and the danger of weaker US growth. The euro's cheap and staying cheap until something changes in Europe."
That's a good take and it's tough to find much to be optimistic about in the eurozone.
