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Economists at Deutsche Bank have smoothed the EUR/USD forecast for this year due to the instability in Europe. 

Key quotes

“But questions around Europe’s systemic stability linger and newsflow on this front in recent weeks has been disappointing, including ECB reluctance to deploy OMT; the German Constitutional Court decision and delays in putting together a Recovery Fund.”

“We flatten our EUR/USD forecast for this year, with a 1.10 year-end target.”

“Beyond this year, our assumption is that Europe moves closer to further integration and EUR/USD is able to recover closer to estimates of purchasing power parity, also helped by monetary policy convergence and a turn in the broader dollar cycle.”