Credit Agricole CIB FX Strategy Research argues that further EUR/USD gains from here are unlikely to prove sustainable.
“It will be external factors such as Fed rate expectations that drive the pair. As such all eyes will be on Fed speakers and July CPI. In both cases we see limited scope for disappointments. With policy differentials not supporting a further move to the upside, caution is warranted,” CACIB adds.
“With speculative oriented investors’ selling interest in the single currency rising and as there is limited scope of policy differentials diverging further to the benefit of majors such as EUR/USD, we advise against buying at these levels.
If anything, still elevated long positioning should leave the currency subject to downside risks,” CACAIB argues.
Source: Credit Agricole CIB Research
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