EUR/USD: Crédit Agricole maintains its sell recommendation despite the recent rise

In a note published today, Credit Agricole recommends against buying the euro at current prices:

"With speculative short positioning now lower, the euro is expected to become less sensitive to monetary policy outlooks. Low commodity prices and mutinous growth should increase the downside risks of inflation in the euro area as a whole. This is particularly true if one considers that the medium-term inflation expectations measured by the 5-year swap rates fell to the low of several months.

Given that the EUR itself is considered an important factor influencing inflation, the strength of the euro in recent weeks should also not be seen in a positive light by the ECB.

As for economic data, attention will turn next week to the IFO German business climate index, which should confirm that growth expectations are capped, especially as demand expectations from China are becoming mixed.

Therefore, we remain in favour of the sale of EUR in the event of a rally, particularly against the USD, which should benefit from the certain probability of a rate hike in September."