Report10 January 2018Updated one year ago

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