Credit Agricole CIB Research maintains a neutral bias on EUR/USD in the near-term.
"We maintain a relatively neutral outlook on EUR/USD in the near term despite the fact that the Fed’s recent pivot towards average inflation targeting has pushed the pair higher of late. This is partly because we think that any future USD weakness could be tempered by further bear steepening of the UST yield curve," CACIB notes.
"We also believe that some positives related to the reduced Eurozone existential tail risks are already in the EUR price. Indeed, this seems to be reflected in the recent build-up of EUR longs as suggested by our positioning data. In addition, our short-term FAST FX fair value model continues to suggest that EUR/USD is looking expensive relative to short-term fundamentals like rate and box spreads and the relative stock market performance," CACIB adds.