Credit Agricole CIB Research discusses EUR/USD outlook and doubts that more sustained upside risk is on the cards in the near-term.
"This is largely due to policy differentials remaining in favour of the USD and as another constructive earnings season (on balance) is keeping US growth expectations well supported.
This in turn may keep the risk asset related capital flow situation in favour of the greenback and that is well reflected in the currency keeping a positive correlation with risk sentiment in general. It must be noted too that the greenback’s positive fundamental backdrop is keeping any verbal intervention’s impact short-lived.
According to our FX Risk Index analysis, investors’ appetite for risk assets is back to neutral, the best level in several weeks and months. At the same time some caution is still warranted when it comes to correction risk as the market continues to run a sizeable long position in the US," CACIB argues.