Societe Generale Research discusses EUR/USD outlook in light of its correlation with USD/CNH.
"If there's downside potential in USD/CNH, then there's less downside room in the near term for EUR/USD. In the last six months or so, the correlation between these two fax pairs has been even closer and a ‘deal' to ease US/Chinese tensions would help pout a solid floor under EUR/USD," SocGen notes.
"It's just a pity that the poor PMI data we saw on Friday (for Germany and the Eurozone) put a cap on EUR/USD at the same time, leaving us in a 1.1300-1.1450 range. Italian budgetary emollience is helping the euro too, but we need to break 1.1450 to change the mood. The same goes for risk sentiment more broadly, probably," SocGen adds.