Has EUR/USD ended its correction and ready for another leg down? Many share this opinion, but not the team at Credit Agricole.
They stay long on EUR/USD and provide reasoning for this stance:
Here is their view, courtesy of eFXnews:
We remain of the view that the EUR is facing upside correction risk in the weeks to come. This is due to stabilizing ECB monetary policy expectations and as the EUR-related capital flow situation may turn more positive towards the end of the year.
First of all it appears unlikely that investors’ central bank easing expectations can rise considerably further unless central bank President Draghi makes a bigger case of sovereign quantitative easing being considered anytime soon. However, ECB members made clear that more time is needed in order to evaluate the latest measures’ impact on the economy.
Elsewhere, improving sentiment, as indicated by the sentix investor confidence survey, may be indicative for rising demand for EUR-denominated risk assets.
As a result to the above outlined conditions we remain long EUR/USD as a tactical trade recommendation.Â
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