UPDATE: EURUSD at 1.2578 - back to July 2010 levels
EURUSD just broke back below 1.2600 (1.2597 lows) which takes it back to August 2010 lows and well on its way to the 1.20 levels that the current Fed and ECB balance sheets would imply - as we pointed out just two weeks ago [2]. EURUSD remains notably below the swap-spread implied valuation (though even this is tumbling) as once again liquidity and credit risks get priced into the cross.
EURUSD at August 2010 lows...
[3]
EURUSD target of 1.20 based on ECB/Fed baalnce sheet size...
[4]
and the liquidity discount is coming back fast...
[5]
EURJPY is also back under 100.
Chart: Bloomberg