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Jan 17 - 12:55 PM

Credit Agricole: EUR Outlook for the Coming Week – Negatives Largely Priced In

By eFXdata  —  Jan 17 - 11:30 AM

Synopsis:

Credit Agricole highlights upcoming Eurozone data and ECB speakers as key focuses for EUR investors, with much of the negative sentiment already reflected in the EUR's price. Markets will look for signs of economic stabilization, while broader USD moves post-Trump inauguration could also shape EUR/USD direction.

Key Points:

  • Upcoming Data:

    • Focus on preliminary Eurozone PMIs and the German ZEW for January to gauge the state of the economic downturn.
    • Evidence of economic stabilization could provide some relief to the EUR.
  • ECB Focus:

    • Speeches from ECB President Lagarde and other officials will be monitored for any signals on monetary policy ahead of the 30 January ECB meeting.
    • Credit Agricole suggests markets may be overly dovish on ECB rate expectations, which could be tested next week.
  • Broader Drivers:

    • EUR/USD expected to respond to broader USD moves driven by developments following President Trump’s inauguration on 20 January.

Conclusion:

With many negatives already priced into the EUR, next week’s data and ECB commentary could determine whether the worst of the Eurozone economic downturn is behind. However, external USD strength remains a potential headwind for EUR/USD.

Source:
Crédit Agricole Research/Market Commentary

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