Credit Agricole CIB Research previews next week's April ECB meeting.

"FX investors will focus on the outcome of the April ECB meeting looking for indications that the latest developments may have forced the Governing Council to refocus its attention on the growth-negative effects of the Middle East crisis and, as a result, soften its hitherto hawkish policy rhetoric. We further note that European business sentiment data has deteriorated notably since the start of the Iran war, and this has highlighted the vulnerability of the Eurozone economy to a lengthy period of high energy prices and geopolitical uncertainty," CACIB notes.

"Turning to the FX market reaction, we start by observing that while EUR/USD has come under renewed selling pressure of late, it continues to trade well above the lows it hit in the earlier stages of the Iran war. We expect that the longer the US- Iran standoff drags on, the likelier economically damaging policies become to ration energy consumption in the Eurozone. A potential softening of the ECB’s hitherto hawkish rhetoric next week could also weigh on the EUR," CACIB adds.