EUR: Credit Suisse expects big rallies before it considers short positions

In a note published today, Credit Suisse notes that one of the themes that currently dominates the market focuses on the strength and resilience of the EUR amidst a risk-averse environment.

According to the bank, one of the main explanations is that unlike the 2010-2013 period, when the euro was still considered to be a currency benefiting from risk appetite, we are now in an era where the euro is considered to be a financing currency and financing currencies tend to rise when the market is concerned about risk.

"For this reason, we are reluctant to position ourselves downward on the euro for now, and we prefer to wait for significant rallies based on rebalanced positions before we get back to the sale of the single currency.

We will also continue to monitor European inflation to see whether it approaches the threshold that could push the ECB to react in one way or another, but in the meantime, we are cautious regarding the euro."