Credit Agricole CIB Research maintains a cautious bias on the EUR over the coming weeks.

"With European natural gas prices hitting fresh multi-year lows and Eurozone PMIs extending their recovery most recently, FX investors could be excused for having all but forgotten about the conflict in Ukraine as a driver of the EUR. Indeed, after having haunted the EUR for most of H222, market fears about a full-blown European energy crisis have started abating in recent months and seemed to justify a more constructive stand on the single currency despite the lingering geopolitical threat," CACIB notes. 

"That being said, yesterday’s escalation of the tensions between the West and Russia may warrant a somewhat more cautious outlook on the EUR. In particular, we think that the worsening conflict could hurt Eurozone business sentiment once again, especially if it complicates Europe’s efforts to replenish its gas reserves in the spring and summer months," CACIB adds.