EUR/USD: High Conviction Of A Rebound Towards 1.25 In 2018 - Danske

Danske Bank FX Strategy Research discusses EUR/USD outlook and maintains a bullish bias over the medium-term for a move towards 1.25.
"We continue to stress that a 2018 rebound towards 1.25 is on the cards for EUR/USD and crucially stress that upside risks dominate the medium-term outlook with levels around 1.30 justified by valuation.
In addition, it is worth noting that policy ‘normalisation’ on the part of the ECB, via rates and in particular flows, will eventually provide support to EUR crosses when the ECB takes the next step away from QE and negative rates. And with the ECB set to phase out QE purchases by the end of 2018 this could unleash the next ‘wave’ of ECB ‘normalisation’ trades in the FX market and induce another level shift (higher) in EUR/USD," Danske argues.