ECB to ultimately put a floor under EUR/USD - Credit Agricole

Credit Agricole CIB Research discusses the EUR outlook and sees a scope for EUR/USD to stay supported on ECB increased hawkishness as of late.

"We continue to expect that the ECB will tighten its policy in coming months while continuing to do whatever it takes to shield the Eurozone periphery from the detrimental impact of that very tightening. To the extent that the ECB is able to close both the USD-EUR rate spread and the peripheral yield spread to Bunds – that historically have been the most statistically significant drivers of EUR/USD – this should make the EUR a more attractive safe haven Safe Haven Safe haven is a term for financial assets that investors turn to in order to better protect themselves, or sometimes even profit from during market turmoil. Safe haven assets most commonly are considered government securities in the United States, the US dollar, precious metals such as gold or silver, low-yielding stocks, or cash, among others. These assets are the most likely destination in times of political or economic crises, or unstable market conditions. Investors who prefer these types o Safe haven is a term for financial assets that investors turn to in order to better protect themselves, or sometimes even profit from during market turmoil. Safe haven assets most commonly are considered government securities in the United States, the US dollar, precious metals such as gold or silver, low-yielding stocks, or cash, among others. These assets are the most likely destination in times of political or economic crises, or unstable market conditions. Investors who prefer these types o Read this Term and ultimately put a floor under EUR/USD," CACIB notes.

"Focus in the first half of this week will be on the ECB’s three-day central bank symposium that starts today in Sintra, Portugal...More evidence that the ECB is committed to containing the Eurozone inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term while shielding the EGB market, can boost the EUR’s safe-haven appeal and prop up EUR/USD at a time when growing recession fears remain the main FX market driver," CACIB adds.

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