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May 14 - 09:55 AM

EUR/USD: 2 Reasons To Remain Skeptical About Sustainability Of EUR/USD Rally - Credit Agricole

By eFXdata  —  May 14 - 08:30 AM

Credit Agricole CIB Research remain skeptical that the recent EUR/USD rally can be sustained in the near-term.

"For starters, we think that, come June 10, the recent tightening of the Eurozone financial conditions could tilt the balance of risks towards a delay of the PEPP taper beyond Q3, especially as the Governing Council tries to avoid further EGB yield spikes during the relatively illiquid summer period," CACIB notes. 

"At the same time, improving US growth and inflation data could push UST yields closer to their March high. As a result, we think that the long-term EGB-UST yield spread will turn more negative again and weigh on EUR/USD," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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