Credit Suisse maintains a bullish bias on EUR/USD and sees a scope for a test of 1.2350 level on Q2.
"The story is not limited to US-sourced USD weakness. Markets continue to upgrade expectations for euro area vaccination schedules, re-opening and the pace of potential euro area growth recovery, which certainly helps. But of equal importance is the fact that euro area 5y5y inflation expectations also keep bounding higher, and have now reached the highest levels since 2018. Markets suspect that the ECB is unlikely to push back too forcefully on EUR strength as long as this indicator is marching steadily higher," CS notes.
"Last week we shifted our expected EURUSD range for the rest of Q2 to 1.1950 – 1.2350. As things stand, a test of the higher level look on the cards very soon," CS adds.