Societe Generale Research adopts a cautious bias on EUR/USD in the near-term, and maintains a bullish bias in the medium-term.

"In Europe, the curve prices 1-year rates in 5 years' time at a mere 7bp....That 2%nominal gap translates into a 1% gap in real terms (using 5y5y inflation swaps) and is, too, back where it was at the start of last year, when EUR/USD was down at 1.12 (though we were arguing it was undervalued down there). There's nothing here to make in the least bit optimistic about EUR/USD," SocGen notes. 

"In the near-term, the euro can get a lift if US yields settle into a range and asset prices rises globally, but it has no homegrown support at the moment. It requires US yields not to rise fast enough to hurt EM and corporate bonds, and equities globally," SocGen adds.