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Morgan Stanley Asks At What Point Will EURUSD “Breathlessness Turn Into Outright Altitude Sickness”

zerohedge.com / by Tyler Durden / Aug 6, 2017 5:32 PM

In Morgan Stanley’s “Sunday Start” note, the bank’s chief European economist, Elga Bartsch, looks at the recently surging EUR, where net spec positioning remains near the most bullish level in the past 6 years…

… notes that according to the bank’s currency expects, the “bull case of 1.28 for EURUSD looks increasingly likely”, but wonder “at what point a bit of breathlessness could turn into outright altitude sickness.

Here is MS’ latest take on “what’s next in global macro” with a focus on the common currency.

Climbing Mountains or Walking Hills

You don’t have to climb one of the mountain peaks in the Alps to feel a bit breathless this summer. Watching the euro climb further might already suffice if you are an investor. And we might not be near the peak yet. According to our currency experts, their bull case of 1.28 for EURUSD looks increasingly likely, even with Friday’s relatively solid US employment reportInvestors will therefore be wondering at what point a bit of breathlessness could turn into outright altitude sickness. For now, the ECB seems unconcerned about the strength of the euro, largely because it is reflecting stronger economic fundamentals and better prospects for political reforms. While it is clear that the euro area economy has shifted into higher gear, it remains to be seen whether reforms will able to make a quantum leap.

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