Credit score Agricole: 'Darkish earlier than the daybreak' for EUR/USD

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Credit score Agricole acknowledges the bearish sentiment surrounding EUR/USD on account of Eurozone underperformance, political dangers, and US-EU commerce tensions. Nonetheless, they keep a impartial EUR/USD outlook within the subsequent three to 6 months, anticipating a restoration towards 1.10 in the long term.

Key Factors:

  1. Bearish EUR/USD Drivers within the Close to Time period:

    • Cyclical Divergence → The Eurozone economic system stays sluggish, whereas the US economic system continues to outperform.
    • Political & Geopolitical Dangers → Uncertainty within the Eurozone, together with potential US-EU commerce tensions, weighs on sentiment.
    • Coverage Divergence → The ECB is dovish and anticipated to chop charges additional, whereas the Fed stays extra impartial, conserving USD supported.
  2. Impartial EUR/USD Outlook for the Medium Time period:

    • Credit score Agricole doesn’t anticipate a sustained decline in EUR/USD, regardless of near-term pressures.
    • They see restricted draw back past present ranges, as a few of these dangers are already priced in.
  3. Lengthy-Time period Restoration Towards 1.10:

    • Over the following six to 12 months, they anticipate EUR/USD to steadily get well towards its long-term honest worth of 1.10.
    • This assumes US financial momentum slows, the Fed ultimately eases, and Eurozone sentiment stabilizes.

Conclusion:

Credit score Agricole describes the present EUR/USD weak spot as “Darkish Earlier than the Daybreak”, believing the forex pair will get well in the long term regardless of near-term headwinds. They anticipate EUR/USD to stay impartial within the subsequent Three-6 months earlier than transferring again towards 1.10 in 6-12 months.

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This text was written by Adam Button at www.ubaidahsan.com.



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