Credit Agricole CIB Research discusses the EUR outlook and argues that its recent multi-days downside is likely to prove corrective, expressing that via maintaining its long EUR/USD/* and EUR/CHF* exposures.
"The recent EUR/USD selloff does not reflect renewed capital outflows from the Eurozone and into the US. The current situation is thus reminiscent of the price action during the Eurozone sovereign debt crisis when EUR/USD remained largely range bound despite mounting fears about Italy and other peripheral countries...
We think that the best days of the EUR-funded carry trade are behind us. Gradual policy convergence between the ECB and the Fed should push EUR/USD higher over the long-term," CACIB argues.
"As a result to the above outlined conditions we continue to believe that recent Euro downside will ultimately prove corrective rather than a change in trend. Hence, we stay long EUR/USD and EUR/CHF as trade recommendations," CACIB adds.
*Recorded in eFXplus Orders