EUR/USD: Recent gains unlikely to continue – Crédit Agricole

FXStreet Insights Team FXStreet

EUR/USD climbed to its strongest level since early June above 1.0760 on Monday. Nonetheless, economists at Crédit Agricole CIB Research believe that the pair is unlikely to enjoy further gains.

EUR/USD is trading at a premium relative to its short-term fair value of 1.05

“We are sceptical that the recent EUR/USD gains can continue. In particular, we worry that investors risk becoming complacent about the negative impact from the European energy crisis and the ECB tightening on the Eurozone growth outlook. They may also be too confident in the growth-positive impact from the post-Covid reopening of the Chinese economy.”

“We think that investors are underestimating the Fed’s hawkish resolve in the face of a looming US recession. In turn, a more hawkish-than-expected FOMC can be detrimental for risk sentiment in a boost for the USD vs the EUR.”

“We note that the EUR is the biggest market long in G10 FX at present while EUR/USD is trading at a premium relative to its short-term fair value of 1.05.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD edges higher above 0.7050 as hot CPI lifts RBA rate hike odds

The AUD/USD pair gathers strength to near 0.7055 during the Asian trading hours on Thursday. The Australian Dollar edges higher against the US Dollar as hotter inflation data bolsters expectations of Reserve Bank of Australia rate hikes. The US September Personal Consumption Expenditures inflation report will be in the spotlight later on Thursday.

USD/JPY treads water near 158.00 ahead of BoJ

USD/JPY navigates an inconclusive range around the 158.00 neighbourhood ahead of the opening bell in Asia on Friday. Indeed, the pair alternates gains with losses following Wednesday’s decent pullback as investors gear up for the imminent interest rate decision by the BoJ. In the meantime, market consensus expect the central bank to keep its hands steady.

Gold remains sidelined just above $4,000

Gold leaves behind the recent three-day positive streak and faces renewed selling pressure near the $4,000 mark per troy ounce on Thursday. The precious metal’s daily decline comes amid marginal gains in the US Dollar and mixed US Treasury yields, while crude oil prices remain on the back foot.

Binance potentially hacked for $2.77 billion

Crypto exchange Binance may have suffered a $2.77 billion hack on Thursday after on-chain data showed funds leaving the exchange's hot wallets across five blockchain networks to unconfirmed addresses. Binance founder and former CEO Changpeng Zhao noted in an X post that it is likely a hack, but maintained that user funds are safe.

BoJ preview: Hawkish hold

Having hiked rates by 25bp to 1.25% in September, the central messages from the BoJ were largely similar; upside price risks remained, real interest rates were still negative and further policy rate hikes should be expected.

A hot US economy is supposed to sink Gold. It didn't. Here's why

Gold (XAU/USD) remains under pressure near $4,000, as stronger-than-expected United States (US) economic data reinforce expectations of another Federal Reserve (Fed) interest rate hike in December. Economic growth is accelerating, inflation remains elevated, and borrowing costs could rise further.