EUR/USD rallied on the news about a German coalition, a somewhat bullish ECB and the great weakness of the US dollar, that failed to rally on good American figures. What’s next? Here are four opinions:
Here is their view, courtesy of eFXnews:
EUR/USD: Targeting 1.30: ‘It’s More A Question Of How, Not if We Get There’ – ING
“The broader fundamental reasons for a stronger EUR in 2018 : (1) above-potential Eurozone growth, (2) greater European integration, (3)structural and financial reforms and – most importantly – (4) the markets’ general underestimation of the pace and extent of ECB policy normalisation,” ING argues.
“The easing of short-term political risks and a resilient Eurozone economy should give way to a higher EUR. We expect forward-looking FX markets to price in the ECB’s next policy steps this summer (call it Sintra Part II)- and that will see EUR/USD trading at 1.25,” ING adds.
“All of this means that we’re looking for EUR/USD to gravitate towards 1.30 by end-2018 – and for us, it’s more a question of how, not if, we get there,” ING concludes.
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EUR/USD: Scope For A Push Towards 1.23 Before Looking To Fade – TD
TD Research discusses EUR/USD outlook in light of the hawkish tone of this week’s ECB minutes.
As we have noted a few times this week, even though data momentum has tailed off a bit, the pullback was shallow, and recent reports reinforce EUR strength.
short-term EUR valuations look clean as well with the single currency trading at our HFFV level, leaving room for a push towards 1.23 before looking to fade,” TD argues.
EUR/USD: Tech Signal Of A Bullish Breakout: Levels & Targets – BofAML
Bank of America Merrill FX Technical Strategy Research discusses EUR/USD outlook and notes that the surge through 1.2092 is an early sign of a bullish breakout which should be confirmed with a close above 1.21.
“A closing and sustained breakout through the 1.2092-1.21 resistance area extends the uptrend from the 2016 lows and says the 4Q17 correction was enough to lead to another wave higher. It would validate the 12/28 bullish “holiday“ trend line break which is somewhat suspicious. It would also confirm the bullish weekly MACD,” BofAML argues.
Measured move targets for such a breakout, according to BofAML, are the 38.2% at 1.2286, the 50% at 1.2346, and the 61.8% at 1.2406.
EUR: ‘Higher & Stronger’; Revising Our Euro Are GDP Forecasts & ECB Call – Barclays
Barclays Capital Research has revised its growth projections for the euro area to take stock of the ongoing strength of the economic expansion.
“We now expect euro area GDP to grow by 2.5% (up from 2.2%) in 2018, after 2.4% in 2017, the best performance since 2007…
We adjust our call for ECB policy to take into account these revisions as well as the latest information about the debate within the GC.We expect: 1) an adjustment of the forward guidance on rates to be decided at the April meeting, focussing on the future path for rates and disentangling the exit from negative rates and the hiking cycle; 2) the end of the asset purchase programme in September, although re-investment of maturing securities would likely continue at least until 2020; and 3) a first increase in the depo rate by 20bp in December, followed by another increase in March 2019 that would leave the policy rate at zero at least until end 2019,” Barclays projects.
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