FXstreet.com (Córdoba) - The return of capital to the Eurozone this year is pushing the single currency higher against the US dollar, according to the UBS analyst team. "Our one month target of 1.33 has been overshot and now we expect EURUSD to spike as high as 1.37 over the next few weeks".

However, the UBS team maintains its three month target of 1.30 and longer term end year forecast of 1.20 as they "expect stronger US data to induce the Federal Reserve to scale back its third round of quantitative easing this year".

"We also are concerned that the Eurozone crisis isn't over given the weak state of Europe's economy, banks and government debt positions", they comment. "Furthermore, event risk over a one to three month time horizon – in particular the next US debt deadline on March 1 – is likely to hurt sentiment again. That paradoxically should help the greenback. It also makes us more cautious over a three month timeframe on the current rally in the euro crosses".