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- EUR/USD: Not yet in a rush to change core bearish message – Credit Suisse
EUR/USD: Not yet in a rush to change core bearish message – Credit Suisse
EUR/USD has managed to regain parity again. European Central Bank’s (ECB) 75 bps rate hike talk and positive European energy developments have supported the single currency. However, economists at Credit Suisse stick to their EUR/USD 0.9700 end-Q3 target.
Positive developments in European energy markets
“We acknowledge that if the ECB is serious about 75 bps rate hikes, and if the EU is serious about resolving energy difficulties, then two of our key reasons for being bearish on EUR/USD (rate differential dynamics and Europe’s energy malaise) become somewhat undermined.”
“Still, what doesn’t change is the terms-of-trade impact of still high gas prices on the euro area current account position. Nor the risk of further Russian gas supply cuts in coming months. Nor the risk of more risk-averse EUR pricing in the aftermath of the 25 Sep Italian election if a new right-wing government hits budget negotiation difficulties with the EU.”
“So while our EUR/USD 0.9700 end-Q3 target may now take longer to realise, we are not yet in a rush to change our core bearish message.”
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