EUR/USD: What Level Would Be A Cause For ECB Concern? - Credit Agricole

Credit Agricole CIB FX Strategy Research notes that EUR/USD is up c.5% while the EUR NEER has appreciated by 2.7% since the start of year, exceeding levels that in the past have forced ECB officials to voice their concern over the pace of FX appreciation.

In that regard, CACIB argues that the moves in EUR remain contained by historic standards, and the EUR still looks very cheap across the board compared to long-term fair value measures based on fundamental drivers 

"A cause for ECB concern would be rapid EUR/USD gains towards 1.151.16 in the coming quarters, which could affect the outlook for inflation even if it does not change the prospect for a QE-taper," CACIB argues.

EUR/USD is trading circa 1.1125 as of writing. 

Source: Credit Agricole CIB Research