How high can the euro go next year?
ING FX Strategy Research discusses EUR/USD outlook for the coming year following today's ECB policy decision.
"Overall, today's ECB meeting was one big non-event in terms of the spill-overs to the EUR. While the ECB staff revised both its GDP and CPI forecasts higher, one can argue that the change to the CPI forecast is somewhat conservative versus market expectations. For example, our economists are looking at CPI projections at 1.5%YoY vs 1.4% presented by the ECB for 2018. Hence, the kneejerk reaction in EUR/USD lower.
But long-term EUR/USD strength on cards. Going beyond the near-term EUR price action, the rather positive upward revision to ECB's own Eurozone GDP forecast and "greater confidence" that inflation will converge towards the central bank's aim, also makes us more confident in our bullish EUR/USD view," ING argues.
"We target 1.30 next year," ING targets.
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