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".