ANZ Research revises their targets for EUR/USD to reflect modest gains
They mention that the argument for euro strength is gathering pace as "strong momentum in growth and positive political developments have boosted the exchange rate". And that "the break of last year's high around 1.2060 is attracting buying interest".
In addition to that, they argue that the rise in oil prices means that we won't see such a sharp drop in Euro area inflation this year; while saying that growing hawkish tones from the ECB (not sure if they got the memo on the recent jawboning, pfft) suggest that deflationary concerns over a strong exchange rate are receding.
"The ECB's ability to cap the euro through suggestions of extended QE appear increasingly inappropriate. We have therefore brought forward our profile of moderate euro appreciation later this year. Positive developments in German coalition talks have also had a positive influence on the euro", ANZ argues.
Their forecasts for EUR/USD are: 1.2400 in Q1, 1.2500 in Q2, 1.2700 in Q3, 1.2800 by year-end.
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