Jane Foley, Senior FX Strategist at Rabobank, suggests that they expect the recent upside potential to be tough above the EUR/USD 1.20 level in 2018
“ECB President Draghi promoted a cautious outlook on inflation at his December press conference and signalled that the Eurozone economy is not yet strong enough to warrant a reduction of policy stimulus. That said, there was no strong expectations in the market that the ECB would be hiking rates in 2018. The big questions in the market surrounding the ECB relate to whether QE will be drawn to a close after 2018’s nine month tapered extension and in which quarter the following year the central bank is likely to hike.”
“Although the dovish tone of ECB President Draghi on inflation weighed on the EUR, given the substantial upward revision to Eurozone growth estimates and the increased growth risks that are now seen by the ECB, the EUR has likely been provided with adequate sustenance to hold off another bout of USD strength. That said, the market is already long of the single currency. As a consequence, we expect upside potential to be tough above the EUR/USD 1.20 level in 2018.”
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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.