Danske Bank FX Strategy Research discusses EUR/USD outlook going into tomorrow's FOMC December policy meeting.
We expect the Fed to hike the target range to 1.25-1.50% this week’s meeting and to continue signaling three hikes in 2018 and slightly more than two in 2019.
The tax reform is moving closer, but we do not expect the Fed to change its overall strategy of waiting for its approval before taking it fully into account in the projections," Danske argues.
"We do not think the Fed will move the USD much with the December hike, albeit the kneejerk reaction could be for a slightly lower EUR/USD if the dots remain unchanged.
We see EUR/USD staying roughly within the 1.17-1.20 range ahead of year-end," Danske adds.