EUR/USD: Limited downside potential in the near-term – Crédit Agricole

FXStreet Insights Team FXStreet

EUR/USD regained its traction and climbed above 1.06. Economists at Credit Agricole CIB Research see limited scope for EUR downside in the near-term.

ECB will emphasize rate hikes

"Focus this week will be on the Eurozone PMIs and the German Ifo for the month of May. More evidence that the Eurozone business sentiment gauges, in particular, continue to point at relative robust economic expansion from here could help ease further the worst of market recession fears. The data could further allow the ECB to focus on the task of bringing inflation under control and the speeches by a number of Governing Council members should confirm that."

"We further continue to expect that, as part of the policy normalisation, the ECB will emphasize rate hikes and thus help stabilise the EUR by keeping its short-term fair value supported."

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EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.