Credit Agricole on the euro

Credit Agricole CIB FX Strategy Research discusses EUR/USD outlook and notes that the USD surprised the market with a late afternoon rebound on Wednesday.

"There could be scope for a further USD recovery if Congress reaches a spending deal this week which remains our base case. Thus, although our long-term bearish view on the USD remains intact, in the near-term we are likely to see the dollar increasingly prone to short squeezes," CACIB argues.

On the EUR front, CACIB thinks that position squaring related EUR downside risks cannot be excluded, but any downside from the current levels should prove corrective rather than a change in trend.

"Hence, in the bigger picture EUR dips may still prove a buy," CACIB advises.

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