Analysts at ING point out that 2017 has seen the return of a strong EUR - with its comeback driven by both the start of ECB policy normalisation and positive sentiment over what the Merkel-Macron axis could mean for the future of the Eurozone.
“These two forces have worked together to make the EUR fundamentally 'Harder, Better, Faster, Stronger' (Kanye West). And our message to investors in 2018 is to embrace the strong euro; the next major catalyst for a move higher will be when markets position for higher ECB deposit rates - and this story could see EUR/USD rallying to 1.25 by summer 2018.”
“But equally, with "mo' money" comes "mo' problems" – and a stronger euro doesn't come without any economic consequences for European policymakers. Our estimates suggest that only a sharp rise in EUR/USD above 1.25 over a short period of time (say 1Q18) would test the ECB's 'pain threshold'. This scenario, however, would be unlikely in the absence of any disorderly Eurozone bond market moves or an externally driven downturn in the global risk environment.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.