What's next for the euro? Fade any rallies
Credit Agricole CIB FX Strategy Research discusses the possible concern of the ECB Governing Council from the EUR's recent rise.
"EUR could gain more ground before it becomes a cause for concern for the Governing Council. In that, we suspect that EUR/GBP may carry a greater weight in driving the ECB reaction function than EUR/USD or EUR/JPY given the relative weight of the cross in the EUR TWI.
...The above being said, we remain of the view that any EUR gains above recent highs may prove difficult to sustain...All this should underpin the ECB's commitment to policy accommodation despite the improvement in the Eurozone economy. In addition, political risks could return to haunt EUR yet again as well," CACIB argues.
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