86
Currency Analyst since 2010

CA: 5 reasons NOT to sell EUR/USD

Analysts Credit Agricole advise against selling EUR/USD around the current levels for 5 reasons:

  1. Despite the recent dovish rhetoric of the ECB, there’s little scope for policy intervention any time soon, so investors are likely to keep European rate expectations elevated in coming months.
  2. German rates may rise further on improving German growth prospects.
  3. Cross-border capital flows should remain supportive for EUR/USD.
  4. Fed September QE tapering expectations need not produce USD appreciation: the correlation of the greenback with US yields has been decreasing so far.
  5. There’s risk that FOMC policymakers could feel the need to undertake more aggressive forward guidance to compensate for the effects of tapering. This scenario could further undermine USD, lifting EUR/USD.

 

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