An economics book has the following example:
In the USA, a Big Mac sells for 1 USD, while in Germany it sells for 3 EUR.
The "fair" FX relation would therefore be 1 USD = 3 EUR. At the FX market, however, the FX relation is 1 USD = 2 EUR.
The author now concludes that the EUR is undervalued. But I think that's wrong, the EUR is overvalued here, isn't it?