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EUR/USD was hit by the violence of the Spanish police. Is it temporary or will more falls come along? Here are two opinions:

Here is their view, courtesy of eFXnews:

EUR: Downside Corrective Not A Change In Trend; Buy Dips Vs CHF, USD – Credit Agricole

Credit Agricole CIB FX Strategy Research regards  the recent EUR  downside as corrective rather than a change in trend.

“We stick to the view that it will be predominantly about central bank monetary policy expectations to drive the single currency. Both growth and inflation developments have been continuing to improve and such conditions should keep the ECB on track to removing stimulus later on.

We remain of the view that EUR dips should be bought, against both the CHF and USD,” CACIB argues.

In line with this view,  CACIB went long EUR/USD* last  week, targeting a move towards 1.22,  which acts as  CACIB year-end forecast. In its model portfolio,  CACIB also remains long EUR/CHF* targeting a move towards 1.18.

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EUR: Initial Modest Sell-Off On Catalan Independence Referendum; What’s Next? – BTMU

BTMU FX Strategy Research notes that the EUR has weakened modestly  into the new trading week  in response to the Catalan independence referendum.

“Catalonia’s President Carles Puigdemont has stated that the region’s citizens had “earned the right to have an independent state” after 2.26 million votes were cast of which 90% were reportedly in favour of independence. Bloomberg has reported that he could unilaterally announce the formation of a Catalan Republic on the 6th October.

The declaration of independence would have no legal force and would most likely not be recognised by the international community….Nevertheless it places the Spanish government in an increasingly difficult position,” BTMU adds.

“At the current juncture the initial modest euro sell-off appears reasonable. The situation would have to continue to escalate to have a more material and lasting impact on the value of the euro beyond the near-term,” BTMU argues.

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