EUR/USD report: What’s next for euro-dollar

EUR/USD has confounded consensus expectations this year, hit by both intermittent episodes of USD strength and EUR weakness. Of the many factors that will drive EUR/USD over the next 12-18 months, four stand out:

(i) Trade wars;

(ii) European politics;

(iii) the relative ECB/Fed policy outlook; and

(iv) the relative EZ-US growth (and equity) prospects.

Here we outline our baseline and alternative assumptions for these inputs – and our corresponding baseline and alternative EUR/USD profiles.