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Apr 08 - 06:55 PM

EUR: Latest Bounce Not Driven By Improving Fundamentals; Caution N-Term - Credit Agricole

By eFXdata  —  Apr 08 - 03:00 PM

Credit Agricole CIB Research adopts a tactical cautious bias on the EUR in the near-term.

"A look at our short-term valuation models would suggest that the latest bounce in the EUR is not necessarily driven by rapidly improving relative currency fundamentals. Moreover, longer-term risk reversals remain close to the extremes for OTMEUR-puts vs OTM calls for risk-correlated currencies. In our view, this highlights the persistent appeal of EUR-funded carry trades," CACIB notes. 

"We maintain a cautious near-term outlook on the EUR also because the recently introduced lockdown restrictions could slow down the recovery in a number of Eurozone economies. In addition, we note that the European corporates are not aggressively stepping-up their EUR purchases just yet," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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