Credit Suisse discusses its near-term bias on EUR/USD, GBP/USD, and EUR/GBP.
"Last week’s news of a possible breakthrough in Europe’s slow march towards debt mutualisation via the Franco-German agreement for the Recovery Fund led us to become more constructive on the EUR. One important consequence of the recent more decidedly risk on environment is an apparent resolution of a long period of consolidation and uncertainty for the BBDXY Broad USD Index in the shape of a downside breach of support levels just below 1240 that has held since late March. This now means that, in view of the price action so far this week, we are minded to make USD the short side of the G10 trades mentioned above alongside GBP, replacing EUR," CS notes.
"Unless the responses to today’s European Recovery Fund proposals are a total disaster, we can now see EURUSD push beyond its 200-day MA at 1.1012 and make a run towards our new near-term target of 1.1200. We continue to target GBPUSD 1.20 medium term and have also shifted our EURGBP target up to 0.93, in light of an improved tone to intraEuropean debt mutualisation discussions," CS adds.