It's one of the most complicated puzzles in the financial markets these days: How the EUR/USD manages to trade between 1.30 and 1.35 in the last 3 months and even to move above the middle of that range since April despite all of the bad news coming out of Europe? Put the debt crisis aside, how about the political uncertainties in Greece, France and Ireland? To solve this puzzle, FX analysts at Barclays Capital use a financial fair value (FFV) model for EUR/USD. The model has different fundamental variables; it estimates the ‘fair value’ of the EUR based on a rolling 52-week regression of EUR/USD weekly returns on ... (full story)