EUR: Embrace the strong euro
As the key EUR driver, we continue to focus on the ECB's two-step exit strategy from its current ultra-loose unorthodox policy stance, translating into two discrete jumps in EUR/USD higher
Executive summary
- The EUR has changed and we should embrace it. It is no longer priced as a tail risk currency. With the ECB policy normalisation at its start, there are a plenty of upsides.
- The next big thing will be the moment when the market positions for the higher ECB deposit rate. This is not priced in yet.
- We look for the still undervalued EUR/USD to break above 1.25 and test the 1.30 level in 2018.
This report is part of our 2018 FX outlook published December 2017
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