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Nov 25 - 09:55 AM

EUR: Here Is Why We Are Less Constructive On EUR/USD From Current Levels - Credit Agricole

By eFXdata  —  Nov 25 - 08:34 AM

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

"While the EUR has remained close to its recent highs vs the USD the currency generally lagged behind risk-correlated and commodity G10 currencies as well as the GBP, CHF and JPY....That being said, we further note that the Governing Council remains divided on the need for further aggressive tightening once the policy rate reaches the 'neutral' 2% level. The ongoing fiscal measures to counter the effects of the Eurozone energy crisis will also complicate the ECB's job of bringing inflation under control," CACIB notes.

"The lack of credibility of the ECB’s tightening efforts could continue to haunt the EUR ahead of the November HICP inflation data out of the Eurozone next week. This should keep the EUR real rates well below the USD real rates and thus make us less constructive on EUR/USD from current levels," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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