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

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."