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Markets may be healthy but are we facing a 2007-style bubble?

The recent strength in the euro, as well as rises in other global markets, bear a worrying similarity to the bubble-like conditions seen before the global financial crash of 2008, according to Simon Derrick, chief currency strategist at BNY Mellon.

"A lot of the price action that we have seen over the last 20 months is a real echo of what we saw between late 2005 and the summer of 2007," he told CNBC Wednesday.

In the last 20 months, four key metrics have aligned to show surprising correlation with levels seen in the pre-financial crisis period, Derrick said. The euro has risen from $1.21 to $1.37, the German DAX has rallied by 46 percent and the difference between the one-year deposit rate on the euro and the dollar has narrowed.

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Global rally

His comments come amid a global stock market rally, which saw the S&P 500 clock up its seventh record close this year on Tuesday. In Europe, London's FTSE 100 closed at a three-week high on Wednesday and the FTSEurofirst 300 Index closed higher for a seventh-straight day.

Meanwhile, emerging markets – which faced something of a battering at the start of the year – have found renewed strength. The MSCI Emerging Markets Index is up around 7 percent since February.

As a result, the worldwide benchmark FTSE All-World index rose 0.17 percent to hit its highest level since December 2007 on Wednesday - and this global rally has some way to go, according to Andrew Goldberg, global market strategist at J. P. Morgan Asset Management.

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"This cycle is going to go well beyond fair value, and there's a number of reasons for it. Monetary value is still very easy. You've got very little competition in the form of fixed income, in terms of what those rates are offering," Goldberg told CNBC.

"This market has plenty of room to run. This could go on two or three more years."

Photo: Scott Olson | AFP | Getty Images

Currency options

Derrick stressed that currency options - financial instruments that allow investors to hedge against foreign currency risk - remained under pressure. The one-year forward-implied volatility for euro/dollar stands at 7.3 percent, according to Reuters data.

Derrick also noted that euro/sterling was also displaying a similar run-up and Commodity Futures Trading Commission data showed investors were again dumping the Japanese yen to speculate on the euro pushing upwards even further.

"You can argue whether or not it's reflecting the same fundamentals, or whether or not it's a bubble, but the price activity itself - it's almost exactly the same as we saw in 2007," he said.

But Goldberg added that just because something is above fair value did not necessarily mean a pullback was in store, adding: "It just means the markets are more susceptible to a shock."

Where do we go from here?

Derrick said that one key difference could be what the European Central Bank (ECB) decides to do at this juncture, describing it as a "thorny subject."

Many market-watchers have suggested that the central bank could be ready for a negative deposit rate - effectively charging banks for holding deposits at the ECB in the hope that the money finds its way into the economy instead. Alternatively there has been speculation that U.S. Fed-style quantitative easing could be on the cards.

Read MoreWhy the ECB has to act… versus why it shouldn't

Nonetheless, ECB President Mario Draghi has played down the immediate threat of weakening inflation growth in the Euro bloc or any risk of deflation - where consumer prices fall. Derrick - once again looking back to pre-2007 conditions - says that little action by the ECB against the soaring euro back in 2008 meant investors swiftly concluded they had little to worry about.

"Six and a half years on, it is clear from Mr. Draghi's recent comments that concerns about incipient currency strength are once again building. What is unclear right now is whether anybody is prepared to tackle the issue this time around," Derrick said.

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