SocGen on the euro
Societe Generale Cross Asset Strategy Research discusses EUR outlook in 2018, and thinks that the next leg of the EUR/USD recovery should be driven more by EUR rates than USD rates.
"The ECB's very accommodative monetary policy has fuelled a clear acceleration in eurozone growth. In 2018, anything that revives the ECB policy normalisation debate will likely support the euro. Our bearish dollar view owes less to US growth expectations than it does to expectations that the recovery in Europe/Japan is here to stay. We thus expect EUR/USD to continue to unwind its undervaluation.
...Specifically, with more uncertainty surrounding ECB normalisation than the Fed's tightening cycle - implying more room for European yields to grind higher - the next leg of the EUR/USD recovery should be driven more by EUR rates than USD rates," SocGen argues.
SocGen targets EUR/USD in 2018 at 1.21, 1.23, 1.25, and 1.28 by end of Q1, Q2, Q3, and Q4 respectively.
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