EUR/USD: Staying Long But Caution In Chasing Rally; What's The Trade? - Credit Agricole

Credit Agricole CIB FX Strategy Research discusses the EUR outlook and keeps expressing its bullish bias on the single currency via holding a long EUR/USD* from 1.1770 targeting 1.22 and a long EUR/CHF* from 1.1320 targeting 1.18.
EUR has been one of the big beneficiaries considerably from the USD sell-off in recent weeks. We suspect that year-end earnings repatriation flows may have played an important role especially in the case of EUR. That said, some fundamental drivers may have had a role to play as well.
All that said, the EUR rally in recent weeks may suggest that some of these positives are already priced in and thus leave the bar for any positive surprises relatively high. We advise caution on chasing the rally in EUR/USD from current levels in the very near term. At the same time, longs in EUR/CHF still look attractive at present," CACIB argues.