Here is why we see some downside risks for EUR/USD in the near-term – Credit Agricole

Credit Agricole CIB Research sees a scope for EUR/USD downside in the near-term.

“We continue to see some downside risks for EUR/USD in the near term.
In particular, we think that Fed rate hike expectations are in for a
rebound after they have been pared back far too aggressively in response
to the latest banking sector turmoil in our view. We think that
abating banking sector risks and evidence on Thursday and Friday that
US inflation remains very ‘sticky’ could be the trigger of a renewed
move higher in US rates and yields,” CACIB notes.

“In contrast, potential downside surprises from the Eurozone HICP data on Friday
could force investors to reassess their stance on the ECB’s policy from
here. To the extent that this leads to lower EUR-USD nominal and real
rate spreads, it should add to the downside risks for the EUR,” CACIB
adds.

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