EUR/USD: Break-out of multi-year 1.05-1.15 range to the topside? – Deutsche Bank
Following President Draghi’s upbeat speech in Sintra, George Saravelos, Strategist at Deutsche Bank, suggests that they are completely revising our EUR/USD outlook for the rest of the year and now see the risks as shifting towards an attempted break-out of the euro’s multi-year 1.05-1.15 range to the topside.
Key Quotes
“The speech is not the fundamental driver behind the change in view, but it aptly marks the culmination of a number of developments that have caused us to change our forecasts. We now see the risks as shifting towards an attempted break-out of the euro’s multi-year 1.05-1.15 range to the topside.”
“We now expect EUR/USD to rise to 1.16 or above by the end of the year (previous year-end forecast: 1.03). More structurally - unless an existential Eurozone crisis returns we see the conditions as having fallen into place for this year’s 1.03 low to mark the bottom in the medium-term EUR/USD bear market.”
“For now our main message is that the EUR is likely to be the key vehicle via which financial conditions in the Euro-area will be tightened. This could well mean that, like the Fed's exit, the ECB is unable to tighten as much as it thinks, but only because EUR/USD is rising in the first place.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
