EUR: It Is About External Factors; Staying Long EUR/CHF - Credit Agricole

This week’s weaker April Eurozone inflation had only a limited impact on the EUR and investors’ central bank rate expectations. It must still be noted that ECB President Draghi stressed, as part of this week’s press conference, that further weakening prices are expected.

Hence the latest development is not going to put the ECB’s base case at risk. Elsewhere, speculative positioning is broadly balanced suggesting limited scope of position squaring. Looking ahead rising central bank interest expectations may be needed in order to trigger fresh demand for the currency.

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In the absence of domestic triggers, it will continue to be about external factors such as Fed rate expectations, at least with respect to EUR/USD.

When it comes to crosses such as EUR/CHF we do not exclude further upside in the weeks to come. In fact, we stay long the cross.

*CACIB maintains a long EUR/CHF from 1.0930 with a stop at 1.0720, and a target at 1.1280