Credit Agricole CIB Research discusses the EUR outlook and flags a scope for further decline in the near-term.
"The EUR has been among the worst performing G10 currencies since the start of the week and we think that the single currency could continue to struggle in the nearterm. This is because of growing concerns that the EU heads of state may fail to reach a compromise on the EU recovery fund later today and thus leave market hopes for a Hamiltonian moment in Europe in tatters..In our view, a failure to find common ground on the EU recovery fund today could weigh on the EUR vs the USD, JPY and CHF especially if the outcome further triggers a renewed widening of the EGB peripheral spreads to Bunds," CACIB notes.
"We further note that the likes of the EUR and AUD are still looking overvalued with the EUR also looking overbought...Monday while our positioning indicator suggests that the market is quite long the EUR already. This could keep the EUR grounded even if the upcoming Eurozone PMIs as well as the German ifo continue to point to gradual economic recovery ahead," CACIB adds.