Nordea FX Strategy Research discusses EUR/USD outlook and notes that the pair has broken above its 2017 high and is now again markedly stronger than the ECB anticipated.
"For how long will ECB accept that, if EUR/USD is not helped lower by other factors?...On a monthly chart, 1.23 and 1.26 are the next more important levels, representing sloping resistances since 2008.
The last time ECB officials voiced concern about the strong EUR was in August and September in the wake of a 7-9% stronger EUR compared to the staff projection assumptions by the ECB.
So far EUR/USD is roughly 4% stronger than anticipated in the staff projections for the December meeting. Maybe 1.25 will prove to be the new 1.20 (the level where ECB intervenes verbally)," Nordea argues.