Credit Agricole see limited room for dovishness from the ECB board members this week and combined with an overly short market and potential for risk asset related capital flows, it adds up to the likelihood of gains for the single currency.
They only see more aggressive policy action if serious downside risks emerge. As such they see scope for EUR/USD to rise to 1.3710
Goldies on the other hand see the ECB continuing to fight deflation and with the BOE looking upwards on rates they see scope for a widening of rate differentials between the UK and Europe.
As such they’ve revised their EUR/GBP and EUR/USD forecasts which ultimately affect their GBP/USD calls too.
- EUR/GBP 3mth forecast at 0.78 vs 0.82 prior. 6mth 0.77 vs 0.79 prior. 12mth 0.75 vs 0.79 prior
- EUR/USD 3m 1.35 vs 1.38 prior. 6 & 12m unchanged at 1.34 & 1.30
- GBP/USD 3m 1.73 vs 1.68 prior. 6m 1.74 vs 1.69 prior. 12m 1.73 vs 1.65 prior
I should play fair in that Credit Agricole are looking more shorter term than perma USD bulls Goldies but it does show two sides of the sentiment fence over the teflon currency.
The CA analysis is also from a different person than the one who entered short trades a few months ago but I’ve no idea if they are still in them or not.
If you’re reading this Manuel Oliveri, give us a tinkle to let us know how your doing, cheers
