“The excitement around the fact that the ECB will consider taking more aggressive measures this week, has increased significantly, after Draghi pointed to the downside risks to the long-term expectations for inflation in the last week. All this, coupled with the weakening of capital flows led to a reduction to the first EUR lows this week.
Taking into account the potential revaluation of the market in favor of a more conservative (but still cautious) position of the ECB, EUR looks oversold at current levels. Firstly, we believe that it is too early to expect the ECB announcements of new more aggressive measures. Secondly, it should be remembered that the leadership of the ECB has repeatedly stated his belief that the June package still will have a stimulating effect on economic growth and inflation in the euro area.
These factors, along with an excess of speculative short positions, not only to speak against further sales and profit-and ahead of a meeting this week. In the medium term, against the background of the debate about the origin of quantitative easing, the ECB, we recommend selling the EUR to rise, especially against currencies with higher returns, such as the AUD. »- Approves Credit Agricole.
** CA last week reached the goal of his latest short positions on EUR / USD before the end of August at around 1.3300, recording a profit of 480 points.