Unlikely to claw back losses if the Fed keeps options open for another rate increase in Q4 – SocGen

EUR/USD tumbled to a three-month low on Friday of 1.0632, erasing the previous low of May (1.0635). Economists at Société Générale analyze the pair’s outlook. 

Rebound depends on turnaround in 10Y real spread

The likelihood that rates have peaked could make it harder for the Euro to claw back losses if the Fed on Wednesday keeps options open for another rate increase in Q4 and upgrades the growth outlook for the US economy. 

A break-out in 10Y UST yields above 4.36% could keep Euro buyers at bay (resistance 10Y UST/Bund 172 bps).