Credit Agricole reports that the Euro (EUR) has started to consolidate against the USD and GBP, appearing undervalued according to their short-term fair value model, FAST FX. This perceived undervaluation has attracted some buyers, and aligns with the fact that the EUR is trading at a discount relative to its rate differential vs the USD and GBP.

However, Credit Agricole expresses doubts about a significant EUR rebound, especially against the USD, due to several reasons:

1. The EUR-USD rate spread has peaked, and the bank expects it to lower as markets reassess their dovish outlook for the Federal Reserve.
2. Recent data disappointments from the Eurozone have indicated growing stagflationary risks, particularly in Northern Europe.
3. Positioning data suggests that the EUR is still very overbought against the USD, and to a lesser extent, the GBP.

These factors could limit the potential for a substantial rise in the value of the EUR in the near future