EUR/USD continues hovering around the highs, but isn’t going anywhere fast. What’s next?
Here is their view, courtesy of eFXnews:
NAB FX Strategy Research maintains its positive EUR view noticing that European rates and the EUR are currently in an impulsive upward phase, with investors in something of a higher yield, higher EUR price discovery chapter.
In particular, NAB argues that with the USD much closer to a range bottom than top, an improvement in US data or any shift in US politics towards a Healthcare deal and thus a fiscal splurge will aid the USD, but less so against the EUR especially on the back of NAB’s expectation of an ECB tapering announcement 7 September and a likely removal of the pledge to extend QE at the 20 July meeting,
In line with this view, NAB now targets EUR/USD at 1.17 in Q3; thus breaking the rough 1.05-1.15 two and a half-year range amid a structural re-rating.
“But we don’t think the EUR will extend much beyond there until 2018 and indeed, see end December at 1.15 on the premise the USD fights back in Q4. These competing forces suggest a wider 1.12-1.27 2018 range,” NAB argues.
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