EUR/USD: 2 Reasons Why Shorts Not A Safe Bet Amidst The Global Trade War – Credit Agricole

Trade wars dominate the headlines and they affect markets. But what does it mean for the euro?

Here is their view, courtesy of eFXdata:

Credit Agricole CIB Research discusses EUR/USD outlook and advises against engaging in short exposure amidst the ongoing global trade wars.

“While we think that the risks to global and European growth stemming from the rampant US protectionism have increased of late, there are a couple of caveats one should consider before using this as a reason to sell EUR/USD.

The first caveat is the fact that Trump’s trade war may prove less damaging for the Eurozone recovery over the long-term especially if the economic rebound remains driven by domestic demand – e.g. household spending and business investment…

The second caveat is the fact that the US protectionism will most likely play out as a drag on global (including US) growth,” CACIB argues.

“In all, we don’t think that markets will turn outright negative on EUR/USD on the back of the rampant US protectionism alone,” CACIB concludes.

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