An interesting nugget was buried in the IMF’s 59 page Article IV consultation, the annual check-up the Fund gives each of its members. The IMF said that in observations made between Feb 25 to March 25 of this year, EUR/USD was overvalued by between 0 and 15%. It is interesting to not that EUR/USD rose from about 1.27 to 1.36 over that time frame. So the EUR is obviously more overvalued now, in the IMF’s view. See page 10 of the report for the relevant passage.
That helped set off the run for the exits earlier on, but EUR/USD has more than recouped those earlier losses as risk appetite grows with the stock market. It’s rebound reached 1.4085, squeezing shorts taken on the IMF news…tough trading continues.
