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The calls for euro/dollar parity are far  from over and also USD/JPY has a significant upside potential.

The team at BNP Paribas uses the CLEER model for forecasting the values at the end of 2016:

Here is their view, courtesy of eFXnews:

BNP Paribas CLEER provides model-based projections for cyclical equilibrium exchange rates based on economic fundamentals. This update includes projections to the end of 2017.

Relative fundamentals suggest EURUSD should decline towards parity  while USDJPY’s CLEER should rise towards 130.

BNP Paribas’ economic forecasts through to the end of 2016 indicate that EURUSD’s fair value will decline to 1.01. As the FX market is forward looking, a move to this level could be reached sooner.  Heading into 2017, CLEER projects that EURUSD is likely to stabilise as the ECB ends QE and eurozone yields start to rise. The CLEER for end-2017 is 1.02.

EURUSD CLEER Model parity end 2016 USDJPY 130

USDJPY rose above its CLEER following the announcement of Abenomics’ QQE. Economic fundamentals point to USDJPY’s CLEER standing around 116 at the end of 2016. By end-2017, however, the CLEER is expected to rise to around 129 as US yields continue to move higher.”

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